Breaking Tether USD (USDT) Market Capitalization Doubles This Year

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In Brief
  • Tether USDT sees its circulating supply double in value since the start of the year.

  • The supply-side inflation comes as the wider cryptocurrency market soars in value, seeing demand for the stablecoin liquidity surge.

  • As cryptocurrency supply on exchanges contracts and demand increases, the market is optimistic that a further rally is inbound.

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The total amount of Tether (USDT) in circulation has soared this week, as demand for cryptocurrencies surges amidst all-time highs all-round.



Better Weather, More Tether

The circulating of Tether USD (USDT) has a valuation of just under $36 billion, after soaring over 100% this year alone. The meteoric rise in USDT’s supply closely tracks the price of Bitcoin (BTC) over the same period.

On Jan. 1, the total value of USDT circulating in the space was just under $18 billion, less than half of the current value.



However, as Bitcoin hit a new all-time high, breaking over the $50,000 mark, USDT began seeing huge demand, often diverging positively from USD’s value.

Historically, increased demand for cryptocurrencies sees Tether mint more and more USDT, causing an inflation of the circulating supply. Essentially, this is what the market is seeing this year.

Moreover, optimism in the cryptocurrency market is at the highest ever, translating into more demand for stablecoins to buy cryptocurrencies.

Stablecoins Are The New ETFs

Indeed, the stablecoin market as a whole sees immense growth in both valuation and the number of available options.

USDcoin’s USDC also saw a similar pattern of growth to USDT. Having started the year with less than $2 billion worth of USDC in circulation, the stablecoin now has a valuation of just under $9 billion.

Its market capitalization makes it the twelfth largest cryptocurrency by that metric, just above Uniswap (UNI) and Dogecoin (DOGE). Moreover, USDC recently announced its platform’s expansion to Solana (SOL) to increase its usability.

Accordingly, new stablecoin platforms like Venus (XVS) are also seeing rapid surges in the number of users on their platforms. XVS’s native governance token rose more than ten-fold this year alone.

Is The Market Bullish?

With the increase of stablecoin supply, like Tether, there is now extra liquidity in the cryptocurrency market and will be used to purchase cryptocurrencies.

This adds to the already bulging demand the market is seeing as a result of all-time highs all-round.

There is also a serious cryptocurrency supply issue on exchanges as miners choose to ‘hodl’ instead of sell. Moreover, institutions like Grayscale and MicroStrategy are gobbling up whatever supply is left.

Combine these two factors, and the cryptocurrency market may only be heading in one clear direction; to the moon.

Disclaimer

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Emmanuel entered the cryptocurrency space in 2013 as a cryptocurrency broker. He is a crypto-enthusiast, entrepreneur, and investor, who has built and led several projects and communities in the space. He is CEO and co-founder of Provence Intelligence, a boutique crypto-consultancy firm that aims to bridge the gap between the cryptocurrency and DLT space and the traditional world. Interests include DeFi, non-blockchain DLTs, and the synthetic derivatives space.

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