Record Market Cap Fails to Boost USDT Usage, Hits 4-Year Low

Record Market Cap Fails to Boost USDT Usage, Hits 4-Year Low

The decline in trading activity surrounding Tether’s USDT stablecoin despite its soaring market capitalization raises significant concerns about the token’s actual usage and its impact on the broader crypto market, according to a recent report from cryptocurrency market research firm Kaiko.

  • Trading activity involving Tether’s (USDT) USDT crypto stablecoin has hit multi-year lows.
  • USDT has remained the most broadly used crypto stablecoin regarding market capitalization and trading volume.
  • USDT’s volume of trading has plummeted owing to lackluster cryptocurrency trading and the reintroduction of trading fees.

In a striking turn  of events, trading activity involving Tether’s (USDT) USDT crypto stablecoin has reached its lowest point in the past four years, even as its market cap approaches an impressive record-breaking peak of $83 billion.

Boost in USDT Supply Outpaces Trading Volume

Reports by a recent report from digital currency market research company Kaiko, the decline in volume of trading for USDT, which serves as a critical tool for trading between crypto stablecoins, raises doubts about the token’s remarkable surge in market capitalization. 

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Kaiko implies that the situation seems rather peculiar, given the substantial boost in USDT supply while its actual utilization diminishes.

Crypto Stablecoins have resurfaced as a critical component within the digital investment ecological system, bridging traditional currencies and digital currencies. With a combined market cap of $129 billion, these dollar-pegged crypto stablecoins are pivotal in facilitating digital currency trading.

USDT Trading Fee Reintroduction

Tether’s (USDT) USDT, recognized as the most broadly adopted crypto stablecoin in market cap and volume of trading, has experienced whole lot of growth in the year, nearing its previous record market capitalization of $83.4 billion, established in May 2022. 

This surge can largely be attributed to the collapse of numerous banks and a regulatory crackdown on competing crypto stablecoins, it’s worth noting that Circle’s USDC and Paxos’ BUSD.

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Nevertheless, the volume of trading of USDT has recently experienced a substantial decline. This decline stems from lackluster cryptocurrency trading amidst a bear market and the reintroduction of trading charges for USDT investment pairs by Binance Crypto exchange, the world’s largest digital currency exchange. 

Trading Volume Lowest Seen Since March 2019

CoinGecko’s data outlines that USDT’s volume of daily trading has plummeted below $10 Billion over the weekend for the 1st time since March 2019.

“ And once examining the actual usage of the crypto stablecoin on both centralized and decentralized exchanges, the observed increase appears rather abnormal,” expressed Kaiko, shedding light on the disparity betwixt USDT’s soaring market capitalization and its diminishing trading activity.

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The other side

  • Although while trading with Tether’s (USDT) USDT crypto stablecoin has  dropped to multi-year bottom Line, it’s notable that crypto stablecoins serve numerous objectives beyond trading, such as supplying stability and liquidity to the cryptocurrency market.
  • Regardless of the past few decline in volume of trading, USDT remains the most broadly used crypto stablecoin, indicating its continued importance and influence in the cryptocurrency ecosystem.
  • The decrease in USDT’s volume of trading could reflect the overall market conditions, including a bear market and the impact of regulatory measures, rather than solely indicating a lack of confidence in the crypto stablecoin itself.

Why This Matters

The decline in trading activity surrounding Tether’s (USDT) USDT crypto stablecoin, regardless of its soaring market cap, raises whole lot of concerns about the token’s actual usage and its impact on the broader cryptocurrency market. 

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This discrepancy sheds light on the evolving dynamics within the digital currency ecological system, emphasizing the need for a closer examination of crypto stablecoin functionality and its role in facilitating cryptocurrency trading.

To learn more about Tether’s (USDT) efforts to strengthen crypto stablecoin reserves and their Bitcoin investment, read here:

Tether (USDT) Strengthens Crypto Stablecoin Reserves with Bitcoin Investment

To stay updated on Tether’s (USDT) fortification of reserves and the surge in USDT profits during Q1, read here:

Tether (USDT) Fortifies Reserves & USDT Profits Surge in Q1 Triumphs


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