The number of USDT on exchanges is growing: what does this mean for the crypto market?

Since the beginning of August 2024, analysts from CryptoQuant have observed a significant increase in the volumes of the stablecoinA type of cryptocurrency that is pegged to a stable asset like a national currency (e.g., US dollar), gold, or another commodity. USDTA stablecoin pegged to the value of the US dollar, meaning each USDT maintains a fixed value roughly equivalent to one dollar. on cryptocurrency exchanges.

Interestingly, the inflow of USDT to the exchanges is accompanied by a rise in the number of smaller investors. Specifically, there has been a notable increase in the number of holders with balances between $1,000 and $10,000, while the number of large players has remained virtually unchanged. This may indicate growing interest in the cryptocurrency market among retail investors searching for new opportunities.

At the beginning of September, the total supply of USDT reached a record high of $125.01 billion, which constitutes 70.7% of the entire stablecoin market. This suggests a high level of trust in USDT.

Typically, when stablecoins begin to flow onto exchanges and are stored there in significant amounts, investors prepare to purchase other cryptocurrencies. This could signal a potential future increase in demand, which would lead to rising cryptocurrency prices. However, if the global economic situation remains unstable, the influx of USDT might simply indicate that investors prefer to keep their capital in stablecoins, avoiding more volatile crypto assets.

Meanwhile, a shadow has fallen over USDT

According to the Wall Street Journal, USDT has acquired the status of "incognito dollar" in countries such as Venezuela and Russia, where the stablecoin is actively used to circumvent international sanctions.

In particular, in Venezuela, USDT is utilized by the state oil company Petroleos de Venezuela to pay for oil supplies. The article also notes that Rosbank organizes payments using USDT for its clients.

Thus, according to the authors of the piece, USDT may pose a serious threat to the U.S. financial system, as it remains an unregulated asset. Reports indicate that USDT trading volumes in 2023 exceeded those of payment system Visa, with the company Tether, which issues the stablecoin, earning $6.2 billion—more than the largest global ETF provider, BlackRock.

It's worth mentioning that Tether reported a record net profit of $5.2 billion for the first half of 2024.

Meanwhile, Tether, TRON, and TRM Labs have announced the formation of the T3 Financial Crime Unit (T3 FCU) aimed at combating the illegal use of the USDT stablecoin on the TRON blockchain. This blockchain accounts for 51.34% of the total USDT tokens in circulation, or 60.78 billion tokens.

The T3 FCU initiative involves close cooperation between the public and private sectors to enhance the security and reliability of digital assets.

Since the launch of the T3 FCU, over $12 million has already been frozen in cases related to extortion and investment fraud schemes.

Source: The Wall Street Journal, CryptoQuant, Tether