What really happened to the Tether supply boom?

Despite the sharp decline seen in the cryptocurrency markets, summed up by Bitcoin, a 50% drop occurred on March 12, the number of USDT has exploded to date.

In fact, according to news aggregator Unfolded, the market capitalization has surpassed $ 6 billion, with $ 1 billion added in just the past two weeks. In an industry worth less than $ 200 billion, such cash flows are clearly noticeable.

Moreover, rival stablecoins like Paxos Dollar, USDC, BUSD ... - have also been printed tens of millions of dollars more.

This raises two questions: 1) what is driving this demand for stablecoins? and 2) How will an increase in the stablecoin supply affect Bitcoin?

Why USDT increased vertically?

Sam Bankman-Fried, a former institutional investor who became the CEO of both FTX and Bitcoin Alameda derivatives exchanges, recently highlighted the phenomenon of USDT rising rapidly to three factors:

OTC traders, mainly from Asia, are seeking to buy USDT. Although Bankman-Fried did not elaborate on this assertion, the fact is that Chinese traders use USDTs because they have easy access to the cryptocurrency market at the cheapest cost. Some also consider USDT to be a good way to move money around the world, even if one doesn't want to interact with Bitcoin.

People are selling Bitcoin to USDT for protection.

People are selling Bitcoin to USDT to reduce risk.

All this, he wrote, is the USDT price-rising bridges.

Price increase for Bitcoin

Although the majority of USDT demand is aroused by sellers' demand rather than investors seeking to buy BTC with stablecoins, the strong increase of USDT could be a push for the cryptocurrency market in the future. .

As Bitcoin Magazine reported earlier, Charles Edwards, a digital asset manager, commented in January that major changes in Tether market capitalization, led to Bitcoin's price in 1.5. past year.

This seems to have proven to be true when BTC soared to $ 10,500 in mid-February, according to the fake index he discovered just a month earlier.

In addition, before the collapse of nearly 50% in November 2018 saw BTC drop from $ 6,000 to $ 3,150, the amount of USDT in circulation dropped by hundreds of millions; In addition, before the majority of the 330% demonstration in 2019 was the printing of hundreds of millions of USDT.

The USDT printing at the record level we are seeing will suggest that Bitcoin will soon witness a record rally.

Basically, this makes sense; Although there are a few details on how one can remit US dollars and receive USDT back, bringing fiat into the industry via stablecoins will eventually act as a catalyst for Bitcoin's growth as people USDT holders sell their money to BTC or other digital assets.

Hòa Thân

According to Cryptoscale

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