Trading with Tether’s USDT stablecoin has dropped to the lowest levels in several years. The token’s increase in market value is now being questioned by the crypto market research firm Kaiko. They released a report on Monday saying that it is questionable whether the token’s market capitalization is really at near all-time highs.
Stablecoins are mostly used for trading. The recent increase of USDT’s supply to $83 billion, even though its use for trading is declining, seems unusual according to Kaiko.
Stablecoins worth $129 billion have become very important in the digital money world. They connect regular money with cryptocurrency and make it easier to trade digital money. USDT is a stablecoin made by Tether. It is the most popular stablecoin based on how much it’s worth and how much people trade it.
USDT has gone up a lot this year and is now close to its highest market value ever, which was $83. 4 billion in May 2022. The increase is mostly because of banks closing down and problems in the U. S economy Government is taking action against competing digital currencies like Circle’s USDC and Paxos’ BUSD.
The number of tokens being traded has gone down a lot because not many people are trading cryptocurrency in a bad market, and the biggest exchange in the world, Binance, has started charging fees for trading certain types of cryptocurrency. This weekend, the amount of USDT being traded each day dropped below $10 billion for the first time since March 2019.
Kaiko said that the use of stablecoin has increased a lot on both centralized and decentralized exchanges.
Interesting situation of USDT’s expansion.
The crypto industry has been questioning Tether for a long time about which assets support the value of USDT and the absence of audits. At the end of March, Tether had about $82 billion worth of assets, including U. S Stablecoins worth $79 billion are backed by treasury bonds, gold, and bitcoin, as stated in a report by BDO Italy.
Clara Medalie, who is the research director at Kaiko, expects that the market value of stablecoins will decrease because fewer people are trading them. This is because trading is the main reason people use stablecoins. The total value of USDC and BUSD stablecoins has gotten smaller at the same time as the amount of trading has decreased. “But we haven’t noticed this pattern with Tether,” Medalie said.
One reason USDT has been growing despite trends is that people are moving their money to exchanges outside the US. Regulators are now making a stricter division between cryptocurrency and the regular financial system. “Business people who usually use U. S n” currency” People are not able to use dollars anymore, so they are using Tether instead,” Medalie said.
Another reason could be the Tron blockchain, which has cheaper fees than Ethereum. Most USDT tokens are made on a network created by Justin Sun, a rich person in the cryptocurrency world. Binance has the biggest USDT addresses on this network. “Tron, Tether, and Binance may be connected because market makers might choose to use Tron’s network because it has low fees. They might then supply Binance with USDT. “