The Tether treasury has minted just shy of $1 billion in USDT stablecoins this month, pushing its market cap to over $7.5 billion for the first time. Stablecoins are cryptocurrencies that have their values pegged to fiat currencies, such as the US dollar, and are typically backed by reserves of the same amount of money.
According to Whale Alert on Twitter, a tracker that monitors several blockchains for large transfers, Tether minted $999 million in new USDT in April alone, making it one of the most prolific months on record for the cryptocurrency. A large influx of new stablecoins onto the market is often seen as a bullish sign since stablecoins are one of the easiest ways to on-ramp from fiat to cryptocurrencies.
💵 💵 💵 💵 💵 💵 💵 💵 💵 💵 120,000,000 #USDT (121,232,432 USD) minted at Tether Treasury
— Whale Alert (@whale_alert) April 27, 2020
Throughout this month, the price of Bitcoin has also performed well. After starting the month at $6,400, Bitcoin’s price has risen 20% to its current value of $7,750. Although there have been reports that Tether’s influence has pushed up Bitcoin’s price in the past, a recent report casts doubt on those claims.
So far this year, Tether has printed $2.7 billion USDT in total, with $120 million in February and $1.4 billion in March. At the same time, other stablecoins have seen much less activity. There has only been $250 million new USD Coin (USDC) , $20 million new Paxos Standard (PAX) and $180 million Binance USD (BUSD).
It is unclear why so much money is being funneled into the Tether stablecoin, which is only 74% backed according to filings released in the New York Attorney General's investigation into Tether's $850 million lost funds and has never completed an audit, compared to other stablecoins, some of which perform regular audits.
Much of the newly minted Tether this year was produced in batches of 120 million USDT, which Tether CTO Paolo Ardoino notes are "inventory replenishes."
"Note this is a authorized but not issued transaction, meaning that this amount will be used as inventory for next period issuance requests," said on Ardoino on several of the Whale Alert posts. This means that this USDT is on-hand so that fiat deposits can be fulfilled quicker—they will only enter circulation when they are issued, which will only take place when Tether receives the equivalent amount in fiat from customers. However, since then, many of the amounts may have been authorized.
Tether is currently available on several blockchains, including the Omni layer, Ethereum (as an ERC20 token), and Tron (as a TRC20 token). Although Omni was previously the most popular chain for USDT, it has since been overtaken by Ethereum—which now hosts around 75% of the Tether supply. On the other hand, Tron now hosts $814 million USDT, which is equivalent to almost 11% of the Tether supply.
With a market capitalization of $7.5 billion, Tether is edging closer to becoming the third-largest cryptocurrency. This slot is currently occupied by XRP, with a market cap of $8.75 billion. But when it comes to trading volumes, Tether leads the way.
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