Aggressive Demand for Stablecoins Has Tether Printing 3.4 Billion USDT in Jan. 2021 So Far
Tether’s market cap is ready to breach $25 billion.
At the beginning of this year, the market cap of Tether was just over $21 billion, and at the start of Dec., it was $19.1 billion, as per CoinGecko.
This is no surprise given that Tether is the most heavily traded crypto asset, more than Bitcoin BTC 11.37% Bitcoin / USD BTCUSD $ 48,773.53
$5,545.5511.37% Volume 55.02 b Change $5,545.55 Open $48,773.53 Circulating 18.64 m Market Cap 909.24 b 3 h Billion-Dollar Hedge Fund, Third Point, CEO Is Doing A “Deep Dive Into Crypto” 5 h Citibank: Bitcoin's at the 'Tipping Point' & The Start of Massive Transformation into the Mainstream 6 h Twitter Pulls a MicroStrategy, Announces $1.4 Billion Convertible Notes Offering . In the last 24 hours, while USDT recorded $28.69 billion in ‘real’ volume, BTC did $23.33 billion. The market has also seen a net flow of stablecoins on exchanges every day with a handful of exceptions.
Volume on crypto exchanges are making new all-time highs every day, going to the latest $17.4 billion is propelling the demand for the popular stablecoin. In terms of stablecoin holdings, Binance has the biggest stash of stablecoins at $500 million of USDT and USDC while over $1 billion of its own stablecoin BUSD.
As Sam Trabucco, quantitative crypto trader Alameda Research points out, there are “a lot of the people seeking access” to USDT, which they’re doing so via buying it in the markets, and “they're buying a LOT, and REALLY aggressively.”
And all of this heavy buying often pushes USDT from its $1 peg.
The volatility in the price of USDT also offers “sophisticated firms like Alameda with great setups on all the exchanges” to do large creations and redemptions, providing the opportunity to make money by “selling above where we create, but we're also bringing the price in line so that when aggro buyers come in, it sticks close to $1.”
“Having done big creations when USDT > 1 and big redemptions when it's < 1 will do that — and that's been a powerful tool,” added Trabucco.
And that's why he says the world is missing out on Tether by being so “distrustful” of it.
Tether is currently under investigation by the New York State Attorney General for being only 74% backed by cash reserves.
Since then, Tether has been speaking about all the concerns, with CTO Paolo Ardoino saying time and again that it is 100% backed and fully regulated.
Besides the high demand for buying and selling Bitcoin and other cryptocurrencies and to get access to “the super liquid USDT markets,” there are other reasons for buying USDT as well, such as distrust in local currency or banks and for collateral.