Bitrabo Editorial
According to data from CoinMarketCap, the circulating supply of USDT reached $83.23 billion on June 1.
In previous instances, an increase in the circulation of Tether has led to rapid growth in the prices of Bitcoin and other cryptocurrencies.
Record High Supply of USDT
Current spot rates coupled with a rise in USDT circulation suggest that history may repeat itself.
USDT is a stablecoin whose value is pegged to that of the USD, the world’s largest reserve currency. Tether Holdings issues the token, which is available on various blockchain platforms, including Tron and Ethereum.
However, based on transaction volume, more Tether tokens are used on Ethereum and Tron, with Tron being a smart contracts platform that is Ethereum’s competitor. Ethereum’s fluctuating fees and scalability issues have forced users to transact USDT on alternative platforms like Tron.
As of June 1, more than 50% of all USDT in circulation was on Tron, with over $46.1 billion existing as TRC-20 tokens and distributed to 26,001,516 addresses with 2,272,188 transfers made within the past 24 hours. Meanwhile, Ethereum had $36.28 billion worth of USDT complying with the ERC-20 standard, which was distributed among 4,427,642 unique addresses that had, in total, made 188,122,012 transfers.
USDT remains the most dominant stablecoin with a market capitalization of over $83.2 billion, which continues to rise.
Competing Stablecoins
USDC, a token issued by Circle and backed by fiat currency, is the second most liquid stablecoin with a circulating supply of $28,853,137,492. Unlike Tether, which has not been officially audited by a top-4 firm like Deloitte, USDC is fully audited and releases monthly attestations of its reserves.
Circle’s exposure to the Silicon Valley Bank (SVB) caused USDC to momentarily depeg, falling to as low as $0.87 against the USD. While USDC eventually regained its peg, many users chose to convert their tokens to other stablecoins, mainly USDT and even Bitcoin. The de-pegging of USDC coincided with the rally of Bitcoin and Ethereum from mid-March 2023.
BUSD, a stablecoin previously minted by Paxos, has a market capitalization of $5,167,197,461 as of June 1. However, regulatory headwinds have favored USDT, leading Binance CEO Changpeng Zhao to explain that the New York Department of Financial Services (NYDFS) decision to prohibit new BUSD creation in February 2023 limited the token’s market cap to $25 billion.
Whether the recent increase in Tether usage indicates readiness for a cryptocurrency market upturn is uncertain. Presently, candlestick formations depict that Bitcoin, Ethereum, and other top-10 cryptocurrencies are under pressure as they post double-digit losses from their April 2023 highs.
Feature Image From Canva, Chart From TradingView