The world’s largest stablecoin issuer, Tether, has recorded a new milestone for its flagship stablecoin, USDT. According to the firm’s website, the US dollar-pegged stablecoin has surpassed $120 billion in market capitalization for the first time.
A stablecoin is a type of cryptocurrency that aims to maintain a stable value over time by pegging its value to a reference asset, such as a fiat currency, commodity, or another crypto asset.
Launched on October 6, 2014, Tether’s USDT was designed to provide traders and investors with a digital asset pegged to the US dollar, offering a safe haven from the typical price swings in the crypto world.
What Drove USDT’s Growth?
Tether has had its fair share of successes in the crypto industry over the past months. For example, the stablecoin issuer minted $1.3 billion worth of USDT after a severe market downturn in early August. An increasing supply of stablecoins is frequently seen as an indicator of a potential bull market, which implies that investors are accumulating stablecoins before investing in crypto assets.
By August 9, the minted USDT stablecoins contributed to BTC’s more than 21% rebound, increasing its price from its low value on August 5 to over $60,300.
Recently, a large share has been transferred to major centralized exchanges (CEXs), indicating potential buying pressure from investors.
Data from Arkham Intelligence revealed that in the past 48 hours, Tether’s treasury transferred more than $66 million in stablecoins to Binance and over $20 million in USDT to the Kraken exchange.
Can $120B USDT Trigger the “Uptober” Bitcoin Rally?
The increasing supply of Tether’s stablecoins could spark the next “Uptober” rally, a term used in crypto for October, as the month has traditionally been bullish for bitcoin prices.
In contrast, declining stablecoin inflows frequently result in a correction in the crypto market. On August 12, BTC price dropped below the crucial $60,000 threshold, undergoing a nearly 4% correction as institutional buying of USDT temporarily halted.
According to data from CoinGlass, October has historically been the second-best month for the leading cryptocurrency, yielding average returns of 21%. This follows November, which boasts an average monthly return of over 46% for Bitcoin.
In the last Bitcoin halving year of 2020, the price increased by more than 27% in October and over 42% in November, part of a six-month rally that continued until March 2021.
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