Tether ((USDT)), the leading stablecoin by market cap, recently saw its cumulative transaction volume surge by 20% to hit the $600 billion mark, as per data provider Glassnode.
The total USDT supply also increased from 4 billion at the beginning of the year to surpass $15.7 billion in October.
This impressive run now means that USDT has become the default crypto reserve currency and is dominating the crypto market as the most paired crypto token.
USDT currently pairs with Algorand, Simple Ledger Protocol (SLP), ETH, EOS, Liquid Network, Omni, and Tron. However, almost 65% of Tether remains on the Ethereum blockchain.
Paolo Ardoino, CTO at Tether, commented on USDT’s new cumulative milestone in transaction volume:
“Tether once again proves itself to be one of the most trusted assets in the crypto space. The important role of Tether in the digital asset ecosystem is further underlined by these Glassnode findings,” The CTO stated.
Tether’s high demand in the crypto-verse is paving the way for the mainstream adoption of stablecoins and central bank digital currencies (CBDCs).
USDT Daily Volume Surpasses BTC
According to CoinMarketCap, Tether has an average daily transaction volume of approximately $35 billion, surpassing BTC’s $20-25 billion average volume.
As more of the crypto community turns to stablecoins during the ongoing pandemic, USDT’s supply has increased by almost 300%, marking it as the most widely used trading pair on crypto exchanges.
Data from a recent study shows that Tether is growing in popularity within the digital asset ecosystem, with spot exchanges now denominating trading pairs in USDT rather than BTC.
As per the study from The Block Research, 70% of the trading volumes of exchange platforms are denominated in USDT. BTC only accounts for 15%.
No digital asset has benefited from the crypto winter as much as USDT, which is now the third most dominant cryptocurrency.
Interestingly, Bloomberg’s Crypto Outlook report for Q4 2020 suggests that USDT might soon take the number two spot, surpassing ETH by 2021.
The report argues that ETH’s market cap only surged to $43.2 billion this year amid the DeFi boom in late July. Before that, the market cap had stagnated under $30 billion since 2019.
In sharp contrast, USDT’s market cap has seen steady growth since 2017 and is now rapidly approaching the $16 billion mark.
Possible Reasons for Tether (USDT) Growth
Tether has achieved many milestones this year, even with an ongoing court case claiming that Bitfinex exchange tapped USDT reserves to cover losses.
Moreover, accusations that stablecoin king Tether is not fully backed with dollars have led some in the crypto space to shift to other stablecoins they can trust. Some traders are now preferring decentralized stablecoins USD coin (USDC) and DAI, claiming they are more transparent than USDT.
Measured by total value locked (TVL) in the top DeFi protocols, USDC is leading among stablecoins, followed by DAI.
That said, USDT continues to hold the lion’s share of the stablecoins in circulation. Its growth in popularity is attributable primarily to traders moving into the stablecoin instead of the US dollar to keep capital in the crypto market, but away from other digital assets like BTC that are susceptible to market volatility.
Moreover, many crypto users choose the USD pegged stablecoin because it offers a stable store of wealth, a means of exchange, and a hedge against crypto market unpredictability.
Tether’s growth is also driven in part by USDT’s increasing use in remittances services and crypto ecosystems such as decentralized finance (DeFi).
