Tethers Market Cap Boosts Crypto Rally Hopes

Tethers Market Cap Boosts Crypto Rally Hopes

Despite lackluster trade volume and price movements in the cryptocurrency market, Tether’s market cap is rising, nearing its all-time high of $82.9 billion, with theories suggesting that Binance’s promotion of TUSD and the Tron network’s low transaction fees may be contributing factors.

Regardless of lackluster trade volume and price movements in the digital currency market, Tether’s market capitalization is growing, nearing its record-breaking peak of $82.9 billion. Tether (USDT), likewise known as USDT, is a crypto stablecoin pegged to the United States dollar, making its  price more stable than other cryptocurrencies.

USDT’s Explosive Growth

The question remains: why is Tether’s market capitalization increasing regardless of the lack of strong movements in the digital currency market? 

According to the research company Kaiko, one theory is the fact that the imminent end of BUSD, another crypto stablecoin, and Circle’s USDC March de-pegging event caused traders to rotate into USDT. Nonetheless, data does not show a whole lot of boost in USDT market share relative to other crypto stablecoins in recent months.

JPMorgan and 6 Indian Banks Revolutionize Dollar Trades with Onyx Blockchain

Another possible reason for Tether’s market capitalization increase is Binance’s promotion of TUSD as an alternative to BUSD. This move may have caused traders to move away from BUSD and towards other crypto stablecoins, including USDT.

On decentralized exchanges (DEXs), USDT accounts for just 20 percent of non- crypto stablecoin swap volume, an increase since the start of the year, but not enough to explain the greater than $15 Billion boost in market capitalization over the same period.

Although while the March banking crisis saw a large rotation of financial resources into USDT, the actual usage of the crypto stablecoin on both centralized and decentralized exchanges implies that the boost in market capitalization is “inordinate”, reports by Kaiko. Furthermore, one possible justification for Tether’s climbing market capitalization could involve the Tron network. Most of all, USDT, or $46 Billion worth, are posted on Tron, compared to just $36 Billion on Ethereum (ETH).

Binance Bounces Back: Our Response to the SEC Lawsuit

Regardless of Tron’s minimal decentralized finance (DeFi) activity and the lack of support from major exchanges like Coinbase Crypto exchange, offshore exchanges such as Binance Crypto exchange and OKX possess the largest USDT balances on Tron. This implies that market makers and whales prefer Tron for its low transaction fees.

In contrast to  Tether’s market capitalization, USDC’s market capitalization correlates with trade volume. As USDC volume grows, the market capitalization increases similarly, and vice versa. USDT’s market capitalization, on the other hand, has little correlation with trade volume, which is questionable given that the primary use case for this crypto stablecoin is trading.

Large Tether (USDT) Movements Raise Questions About Market Stability

According to Whale Alert on Twitter platform, there have been plenty of large movements of Tether’s crypto stablecoin, USDT, in the digital currency market in the past 3 hours. These movements suggest a whole lot of transfer of funds, with implications for the broader market.

Revolutionize Your Savings with LYOPAY Vaults!

First, an unknown wallet transferred 50 Million USDT, or $50 Million, to Bitfinex, a trending digital currency exchange. This was followed by Kraken, another leading exchange, transferring 60 Million USDT, or $60 Million, to Bitfinex. Lastly, Tether (USDT) Treasury, the issuer of USDT, transferred 60 Million USDT to Bitfinex. In addition, 50 Million USDT was transferred from JustLendDAO to an unknown wallet.

The movements of these large sums of money suggest that whole lot of trading or financing activity may occur on Bitfinex, one of the largest digital currency exchanges. These transfers could be related to a large buy of digital currency or a whole lot of financing by a hedge fund or institutional investor.

Dapp Industry Booms with 10% Growth Despite DeFi Downturn

In general, the implications of these movements for the broader digital currency market remain uncertain. Nonetheless, given the size of the Tether (USDT) transfers, it is possible that they could impact the market’s overall stability and could lead to a surge or decline in digital currency prices.


Featured image from iStock, chart from TradingView.com 


Read Disclaimer
This page is simply meant to provide information. It does not constitute a direct offer to purchase or sell, a solicitation of an offer to buy or sell, or a suggestion or endorsement of any goods, services, or businesses. Lolacoin.org does not offer accounting, tax, or legal advice. When using or relying on any of the products, services, or content described in this article, neither the firm nor the author is liable, directly or indirectly, for any harm or loss that may result. Read more at Important Disclaimers and at Risk Disclaimers.

Follow us

Latest Crypto News