The blockchain dollar, Tether being a Stablecoin is 1-to-1 pegged to the dollar, so 1 USDT could be valued by Tether at 1 USD.
Ahead of Bitcoin halving which is one of the most anticipated events in the crypto space, the market capitalization of USDT is seen to be on the rise. In the past week, Tether USDT had its market cap exceeding $7.5 billion, surpassing XRP’s figure of almost $5.5 billion within the time frame.
Analysts Explain the Logic Behind Tether USDT Demand Surge, the Effect on Bitcoin (BTC) Price!
Ahead of Bitcoin halving, there are speculations that witty crypto investors might use newly minted Tether and other Stablecoins to fund Bitcoin bid thereby increasing its demand.
This sentiment may be partly fuelled by the harsh macroeconomic situation induced by the Coronavirus pandemic. Analyst at Messari sees USDT and other Stablecoins quadrupling their growth in 2020 following an impending US dollar shortage as demand increases.
An analyst, Swanepoel stated that traders are paying keen attention to the newly minted Tether USDT as historical data revealed has led to a significant rise in Bitcoin’s price.
Litecoin co-founder, Xinxi Wang in the latest tweet says Tether could shake up the crypto market saying that the totality of crypto market cap is now built on sands. He likens Tether to the sands. The co-founder further went on to liken the blockchain dollar to Heroin.
In this kind of scenario, minting more of the USDT could be precarious if Tether does not hold the exact amount of the USD in its reserves.
In the news recently, FSB (financial stability board under the G20 auspices) the latest report provided oversight recommendations to countries to re-evaluate the role of global Stablecoins, this came after Facebook’s Libra announcement, prompting some to believe Stablecoins may come under a ban soon.