Rate this post
July 19, 2021 @ 11:59 +03:00
The money printer has gone quiet. The parabolic growth in the market cap of stablecoin giant tether (USDT) suddenly came to a grinding halt at the end of May, just as bitcoin’s price was coming off its all-time highs. With bitcoin trading in a range of roughly between $30,000 and $40,000 ever since, a new round of chatter has been circulating linking the two events and echoing an old conjecture: Did Tether stop pumping up the price of bitcoin?
China’s crackdown on crypto
The crypto crackdown in China – both on bitcoin mining and trading – has hurt bitcoin’s prices, which are now down by 52% to around $31,000 from their all-time high at $64,928.14 in April. But another victim of China’s renewed crypto crackdown is USDT, the stablecoin whose success can be largely attributed to its dominance among Chinese traders and investors. They routinely use the dollar-pegged stablecoin as an on-ramp to crypto markets through over-the-counter (OTC) brokers because fiat-to-crypto trading or buying digital assets with government-issued cash remains illegal in the country.
USDC on the rise
While demand for USDT appears to have dried, the rising star of the stablecoin market is increasingly USDC, another dollar-pegged stablecoin powered by crypto financial services firm Circle. Boston-based Circle recently announced its plan to go public using a special purpose acquisition company (SPAC), not long after it revealed its goal to expand USDC to at most 10 more blockchains outside Ethereum. Tron, a blockchain helmed by crypto influencer Justin Sun, is among the blockchains that recently started supporting USDC, and according to Circle’s website; one of the goals of doing so is “enabling [USDC] growth in Asia and around the globe.”
Crypto bears vs. tether’s vulnerability
One of the lingering problems of USDT – its reputation within the crypto community – is a third obstacle the world’s largest stablecoin by asset size is facing. “The market is infused with bearish sentiment and traders are looking for a reason,” said Noelle Acheson, head of market insights at crypto prime broker Genesis Global Trading. “It’s FUD (fear, uncertainty and doubt) season, and tether’s vulnerabilities are almost always a part of that conversation.”
Tether Hasn’t Printed New USDT in Weeks: 3 Possible Explanations, CoinDesk, Jul 19