Tether (USDT) Inflows Boost Chinese Exchanges; Stablecoin Continues to Grow Despite Concerns
In the past month, more than 400 million USDT flowed into the markets from the OMNI layer, while the Ethereum-based USDT supply also expanded slightly.
Tether (USDT) keeps growing, now on multiple chains and with regular new printing. The total supply of USDT grew by around 400 million in the past month, to 3.229 billion coins. The printings once again coincide with increased Bitcoin (BTC) price activity, where the leading coin touched the $9,000 level briefly.
Ethereum-based USDT adds another 650 million coins, of which 56% are kept within wallets belonging to Binance and other leading exchanges. There are also 10 million USDT based on EOS, as well as around 37 million TRON-based USDT. The alternatives to the OMNI layer add significantly to the supply of USDT, which may cross the 4 billion mark if the trend for new printings continues.
Worries that loss of trust may translate into a fast market crash have existed ever since USDT started printing coins. Strong connections have been observed between printings of USDT and BTC price spikes. For now, USDT trading continues to be the biggest source of liquidity for BTC, as well as many leading altcoins.
This time, the supply of USDT grows in smaller tranches, thus bypassing bots triggered by larger transfers:
Exchanges have also split their USDT holdings into smaller wallets, and in general, the minting wallet and the Tether Treasury inject the coins in smaller transactions. Tracking those tokens shows that Binance and OKEx have grown their supply of USDT most significantly. Binance has grown its supply by more than 192% in the past month.
The most recent Diar report shows that the greatest demand for stablecoins comes from Chinese traders. The increased USDT activity on the blockchain also reveals increased transfers to and from Chinese exchanges. The stablecoin successfully solves the problem of capital restraints on sending funds out of the country and remains one of the best ways to transfer funds for arbitrage.
“2019 to date flows into exchanges catering primarily for Chinese traders beat the $7Bn of all the transactional value for 2017,” noted Diar.
Chinese traders make up 60% of all USDT transactions on the blockchain, based on exchange location and activity. The Diar report concludes that this may be one of the reasons for the phenomenal trading volumes in 2019, as on-chain transfers of USDT grow together with trading activity. This may also be an alternative explanation to the high volumes on OKEx and other exchanges, where previously the hypothesis was that the activity was faked with bots and other means.
At the same time, US-issued stablecoin Gemini USD (GUSD) saw its supply fall by 80% in 2019, from around 100 million coins to just 20 million. One of the reasons is that GUSD is used as a fiat off-ramp to receive actual dollars. Liquidating USDT for dollars is much harder, so usually traders switch to fully backed stablecoins to cash out.