What explains Tether’s $ 25 billion market capitalization surge?
Tether the market cap hit $ 25 billion today, with Bitcoin trading below $ 40,000 on the price charts. In fact, stablecoin has been one of the most traded assets in all of crypto, with its trading volume even exceeding that of Bitcoin.
Tether’s growth has been incredible in 2020, with stablecoin boasting a 72% market share. In addition, the year-on-year USDT rose 455% from $ 3.2 billion in December 2019 to $ 17 billion in December 2020.
The reason for the growth of Tether
While speculators have always speculated on the credibility of Tether, stablecoin has managed to reduce noise and grow. In fact, it makes sense to look at Tether’s growth, given the demand for Bitcoin.
Lately, institutions have found their favorite alternative investment asset. and invest heavily in it. This integration takes one of two things, USDT or USD. While it is clear that the USDT market far outstrips the USD market, it is also clear that institutions will not have used fiat markets.
This partly explains Tether’s growth in 2019, and same in 2020. Turning to 2021, since Bitcoin exploded through the roof in the first and second weeks of 2021, more and more USDT have been hit.
In 2021 alone , Tether hit a record $ 2 billion in a single week, including $ 1.5 billion the week before. With its market cap reaching $ 25 billion at the time of publication, it can be observed that Tether has grown 19% in just 15 days.
Sam Trabucco of Alameda Research recently shared a rather interesting take on the same thing. He noted that many people who buy Tether don’t do it through creation, but do so by selling or buying it through trading. As the market is volatile, the Tether peg also varies.
Alameda can arbitrate these opportunities through the direct creation / redemption of Tether. This helps stabilize the ankle while also benefiting arbitrageurs.
Sam Trabucco added,
“Other stablecoins like USDC don’t have such volatile premiums – this is because the creation / redemption process is more involved for the USDT, and less companies can do it. This is why, as I noted above, a lot of those who want to go into the markets and don’t create, and when the USDT goes above $ 1? A sophisticated company like Alameda with great setups on all exchanges and bots to run more than one leg at a time is going to want to sell! And we do – A LOT. “
While the New York Attorney General’s lawsuit against Tether is still ongoing, it’s unclear in which direction it will go. However, whatever decision is taken, Tether could get away with it since stablecoin is not available on a blockchain but on multiple chains. At the time of this writing, Tether is on ETH, Omni, TRX, EOS, OMG, Liquid, etc. This is what you call domination.