The Block: Tether mints another billion USDT on Ethereum, stablecoin dominance rises

Late last night, stablecoin issuer Tether minted one billion USDT tokens on the Ethereum network.

According to Tether CTO Paolo Ardoino, the minting represented an "inventory replenish." He added that it was "an authorized but not issued transaction, meaning that this amount will be used as inventory for the next period [of] issuance requests and chain swaps."

USDT is the crypto industry's most-popular stablecoin, pegged to 1:1 to the United States dollar. It is commonly used to facilitate trading on large exchanges that don't accept fiat currencies.

Tether's dominance in the stablecoin market is growing Tether is the dominant stablecoin issuer on the Ethereum blockchain.

The total amount of USDT on Ethereum amounts to over 35 billion tokens. Its closest competitor , the Circle-issued USDC, accounts for less than 30 billion tokens. Meanwhile, Binance USD — which is not currently minting new tokens — makes up less than seven billion tokens.

Broadening the scope to the entire stablecoin supply across multiple blockchains further intensifies Tether's dominance in the sector.

USDT comprises over 81.5 billion dollar-pegged tokens, while USDC still remains under 30 billion tokens. No other stablecoin is even close.

Are USDT supplies indicative of crypto market trends? Some argue that the supply of USDT has historically indicated the direction in which the price of bitcoin — or the crypto market, as a whole — will trend.

"Generally, Tether issues new USDT when they see and anticipate higher demand for it," Simon Cousaert, a research director at The Block, explained. "This indicates new cash is coming into the system — generally used to buy bitcoin, ether and other cryptocurrencies."

"I don't subscribe to Tether conspiracies, but I do subscribe to supply and demand," Decentrader founder and well-known crypto trader filbfilb once similarly tweeted when discussing the relationship between USDT's supply and the bitcoin price in 2020 — when the foremost cryptocurrency was trading under $11,000.

Furthermore, one study from BDC Consulting conducted correlation tests on many indicators last June. It concluded that the supply of USDT "does feature a strong and statistically significant correlation" with the bitcoin price. "The resulting model with market entries and exits timed with the USDT supply spikes yielded an ROI [return on investment] of 229%, showing that stablecoin supply data can be used in trading," it said.

Tether reported a net profit of $700 million for the fourth quarter of 2022, which it said was additional to its reserves, in February. At the time, it claimed its consolidated total assets amounted to at least $67.04 billion, while its consolidated total liabilities amounted to $66.08 billion — reflecting excess reserves of at least $960 million.

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