Tether's stablecoin, USDT, has achieved a new milestone, surpassing a market capitalization of $120 billion for the first time. This significant increase suggests positive sentiment within the broader cryptocurrency market.
According to a recent update on Tether's website, USDT's market cap has been steadily climbing, reaching a new high on October 20th. Blockchain developer and security expert Kadan Stadelmann believes this milestone is a positive indicator of a potential bull market for Bitcoin and the wider crypto asset index.
Stablecoins serve as a bridge between fiat currency and digital assets. An increase in stablecoin supply often signals an impending bull run, as it indicates investors are accumulating stablecoins in preparation for investing in crypto. Conversely, a lack of stablecoin inflows may suggest a market correction.
USDT is backed by Treasury bonds, providing it with greater backing than actual US Dollars. Tether's business model, which involves earning interest on Treasury notes and using those funds to purchase Bitcoin, has contributed to its significant market cap growth.
Centralized Exchange Inflows
Data from Arkham Intelligence reveals that a substantial portion of Tether's recent treasury inflows has been directed to centralized exchanges (CEXs), including Coinbase, Kraken, and Binance. This suggests that investors are actively using stablecoins to purchase other cryptocurrencies.
Potential for Significant Changes
Stadelmann predicts that USDT's growing market cap could be a sign of more substantial changes to come in the crypto market. While the mass adoption of Bitcoin as a currency has been anticipated, he believes USDT's dominance might lead to a different scenario.
Gresham's Law suggests that a sounder form of money may disappear from circulation when competing with a lesser form. In a scenario where Bitcoin becomes widely adopted as a currency, USDT could potentially become the preferred medium of exchange for transactions, while Bitcoin is held as a store of value.
Market Dominance and Growth
On-chain data platform Token Terminal reports that Tether's stablecoin now controls two-thirds of the market, following significant adoption in the past two years. With over 330 million on-chain wallets and accounts, USDT has experienced consistent growth in its user base.
Wider Stablecoin Market
The total market capitalization of stablecoins has also reached a new all-time high of $171 billion, surpassing the previous peak achieved in March 2022. This growth is attributed to increased adoption and usage of stablecoins across the crypto ecosystem.
Overall Crypto Market
While the wider crypto market has seen slight price drops in recent days, Bitcoin's price has remained relatively stable, briefly surpassing $69,000 per coin on October 21st. The increasing dominance of USDT and the overall growth of the stablecoin market suggest a positive outlook for the broader cryptocurrency industry.
October 2024, Cryptoniteuae