Tether printed $ 2 billion tokens last week, a new record for the leading stablecoin project.
According to data from Coin Metrics, more than 24.6 billion cables are now circulating over Ethereum, Tron and Bitcoin Omni Layer, up from 4.8 billion a year ago.
The growth is coming from a variety of factors, said Sam Trabucco, quantitative trader at Alameda Research. “Something [people] Don’t trust their local banks or currencies, ”he said. In this case, the use of USDT is the “most liquid USD-like exposure the market can access”.
Growth also comes when traders start “aggressively selling BTC in USDT” or vice versa, Trabucco noted, which can cause the dollar-peg token to temporarily trade above or below its peg.
So far, USDT has traded slightly above $ 1 for most of January until it fell below the mark early Monday morning, according to market data from the US-based cryptocurrency exchange Kraken.
According to Paolo Ardoino, CTO of Tether and Bitfinex, new institutional Bitcoin investors like MicroStrategy or Ruffer Invest who execute OTC buy orders have also resulted in significant growth in USDT supply.
“Tether customers include all of the major OTC desks and high frequency trading companies in this area,” Ardoino told CoinDesk in a direct message. OTC desks take buyer’s money and routinely convert to USDT to spread buying pressure to all sorts of liquid locations, increasing the demand for more stable coins.
Trabucco also noted “increased volumes” in all cryptocurrency trading venues in recent weeks, combined with “the ability to use USDT as collateral for an increasing number of derivatives” as additional reasons for Tether’s significant supply growth.
For Tether, all of these combined market dynamics have “resulted in an increase in creation,” Trabucco said.
Simultaneously with the rapid growth of the offer, increased attention has been paid to questions relating to support for Tether, an issue that is even the subject of an investigation by the New York Attorney General.
As per previous court statements, the Tether Reserves include cash, short-term reserves, and other cryptocurrencies. No bank statements or legal documents have been issued since 2018, when Bahamas-based Deltec Bank released an unsigned letter confirming that Tether holds reserves of $ 1.8 billion, the equivalent of USDT at the time published that support this claim.
In April 2019, Tether’s offer was only 74% covered by Fiat equivalents, according to a statement from its General Counsel. However, Ardoino reiterated a later statement made in November 2019 Twitter Say on New Year’s Eve: “Tether is fully secured, period.”