Most of the increase in USDT's market value came from traders exchanging assets, not new money
BlockBeats rhythmic BlockBeats news: Recently, Tether (USDT) has been climbing all the way to replace XRP as the third asset by market value. It now has more than $9 billion in USDT circulation, dwarfed by its stable competitor in both volume and total supply.
Paolo Ardoino, cTO of Tether and Bitfinex, said it was no coincidence that half of Tether's total growth came from the market crisis on March 12 and jumped from $4.6bn to $9.1bn in a matter of months.
"Most people think that Tether's follow-through was due to new money coming in," Ardoino said. But Ardoino said much of that growth is actually coming from "fiat money sitting in platforms that don't support stability COINS." OTC counter and trading companies are the main Tether customers in this transition as they convert large volumes of fiat currency into the more flexible USDT.
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He explained that on March 12, the banking system slow let professional traders use hedging strategy hit: "you can see, this happens after March 12th and 13th, because people realize that when the COINS and etheric fang prices fell 50%, many hedge funds to hedge their positions. [... Because if you continue to hold yuan funds, just fast enough, it's really hard to transfer the funds to cover your position."
As a result, traders are looking for faster alternatives to holding fiat money directly. Part of the demand for USDT also comes from the proliferation of derivatives trading platforms that settle trades with Tether or other fixed assets: "BitMEX started offering permanent swaps backed by BTC as early as 2014, but now Bitfinex, Coon, Huobi, OKEx and FTX are all launching all their new products in the US."
Still, Ardoino said, new money is coming into the market. Although percentages are not mentioned, there are clearly two separate components.
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