The dominant stablecoin in the crypto ecosystem, Tether (USDT), has seen its market capitalization surge by more than $5.25 billion since the beginning of March. This surge in stablecoin liquidity bodes well for overall market liquidity, providing foundational support that can meet the demands of Bitcoin (BTC) and other alternative cryptocurrencies.
In comparison, despite significant growth, the combined market of spot Bitcoin Exchange Traded Funds (ETFs) has only seen a net increase of less than $4 billion this month. The fact that the liquidity provided by USDT surpasses the growth in assets under management (AUM) of ETFs indicates there is an ample supply of stablecoin to facilitate the accumulation of both BTC and alternative cryptocurrencies on exchanges.
According to data from CoinMarketCap, Tether’s market capitalization currently stands at $104,056,161,009, reflecting an increase from approximately $98.65 billion at the beginning of the month. This upward trend has been consistently observed, albeit briefly interrupted by a consolidation phase recorded during the month.
Despite ongoing speculation regarding the adequacy of Tether’s reserve backing, the company has consistently denied such claims, receiving vocal support from Howard Lutnick, the CEO of Cantor Fitzgerald, which serves as Tether’s custodian.
Tether’s significance in the crypto market
Since its inception, Tether has played a crucial role in enhancing the integrity of cryptocurrency trading. Numerous billion-dollar transactions involving USDT have been documented recently, with Tether’s USDT being featured on nearly every cryptocurrency trading platform, often forming unique pairs with the majority of alternative cryptocurrencies.
Tether Holdings, the company behind the stablecoin, is gradually expanding its focus beyond merely issuing USDT, aiming to become involved in Bitcoin mining and development with substantial investments in the sector. This association with Bitcoin has sparked discussions regarding market manipulation, contributing to fear, uncertainty, and doubt (FUD) that the company has been actively addressing in recent years.
