Tether Issuance Is Through the Roof, How’s it Affecting Bitcoin’s Price?
In the last couple of months, the total supply of stablecoins has grown from about $5.65 billion to nearly $10 billion.
This surge in supply is propelled by the jump in demand in March and April that recorded huge volumes. In March, the crypto market went through a massive sell-off when bitcoin had its third-biggest fall. That month, the transaction volume of stablecoins hit an all-time high.
Last month was yet another record one, where cryptos recovered all their losses from the March sell-off.
Tether (USDT) however, remains the king which accounts for nearly 85% of the entire stablecoin supply.
“Tether issuance is through the roof and its lead in the stablecoin market is still unrivaled,” states CoinMetrics.
Recently, Paolo Ardoino, CTO at Tether and its sister company Bitfinex, a cryptocurrency exchange, took to twitter to share that Tether’s market cap is more than 10 times the market cap of its closest competitor.
. @Tether_to market cap is back to be > 10x bigger than its closest competitor: 7.85B vs 710M.
— Paolo Ardoino (@paoloardoino) May 3, 2020
Bitcoin price & USDT's supply on exchanges
In April alone, Tether Treasury printed a total of almost $1.59 billion worth of USDT. During this same period, Bitcoin’s price jumped 34%. Bitcoin is currently trading under $9,000.
Tether’s market share on leading spot exchange Binance has especially grown considerably. Initially, when Binance was launched, most of its volume was denominated in Bitcoin or Ethereum but since then Tether’s volume market share on the platform has risen to over 75%.
Moreover, Bitcoin's price moves in the opposite direction of the percent of USDT on exchange.
“There is an inverse correlation between Bitcoin's price and USDT's supply on exchanges. With this metric for the #1 stablecoin trending down, the #1 crypto asset can potentially make another push toward $9,000 and beyond,” stated crypto data tracker Santiment.
Currently, Tether has $7.98 billion worth of assets in supply, as per its transparency page. Out of this $5.6 billion are issued on Ethereum blockchain, $1.3 billion on Omni, $1.2 billion on Tron blockchain, over $16.5 million on Liquid, $5 million on EOS, and $1 million on Algorand.
Tether’s on-chain fundamentals reveal that only 115 addresses control 56% of USDT’s circulating supply, as per IntoTheBlock. The average time the USDT token is held is 1.1 months.
In the past week, the total volume of transactions, greater than $100k, was $5.37 billion.
A safer bet than USD?
Fiat-backed stablecoins have been gaining a lot of traction these past few months especially since Facebook’s Libra project announced last summer.
As a matter of fact, some even prefer to keep their dollars into crypto rather than with the traditional institutions, in the light of the macro environment of capital control and other forms of limiting or confiscating people's money.
In a recent poll conducted by Bitfinex Bitcoin whale Joe007, 38.6% of 2,320 voters showed a strong preference for crypto-backed stablecoin.
“Too bad it's just a pipe dream at the moment as all the problems with DAI demonstrate. Maybe this will change in future,” said Joe007. A few days before this, the bitcoin whale also said “USDT might actually be a safer bet,” when a financial crisis looms because USD in a bank account is also at risk.
Even Frances Coppola, a crypto skeptic and writer of “The Case for People’s Quantitative Easing” recently wrote, “The reserve status of stablecoins may be a confidence trick, but the investment opportunity is real.”