Despite a shrinking stablecoin market, Tether’s USDT, a prominent stablecoin issuer, has achieved a notable milestone by reclaiming its former all-time high market value. According to data from the firm, USDT’s market value on Thursday matched its previous high from a little more than a year ago at $83.2 billion. Tether was able to regain the $18 billion it lost after the failure of the blockchain project Terra in May 2022 and the ensuing market turbulence.

In light of the stablecoin market’s persistent fall over the previous 14 months, Tether’s USDT recovery is noteworthy. By bridging the gap between government-issued fiat currencies and digital assets, stablecoins, a subset of cryptocurrencies valued at $129 billion, serve a critical role in blockchain-based finance and facilitate trading operations.

A portion of USDT’s success may be attributable to its direct rivals’ challenges. The collapse of Circle’s banking partner, Silicon Valley Bank, in March had an impact on the second-largest stablecoin, USDC. The token’s price stability problems are still present. Additionally, when New York state officials required issuer Paxos to cease the production of new tokens in February, Binance USD (BUSD), which once had a market valuation of $20 billion, experienced restrictions.

Tether has come under fire for being opaque about its reserve assets, which include potentially dangerous loans to unknown creditors. A U.S. court ordered Tether to submit documentation on USDT’s backing in response to a complaint claiming that the business was involved in manipulating Bitcoin’s price using recently created tokens. An story from The Wall Street Journal also revealed instances in which Tether used forged paperwork to acquire bank accounts.

Despite these worries, USDT has seen a surge in popularity among stablecoin holders during this tumultuous time because to the supposed security it provides from American regulations and institutions. The market share of USDT has reached its greatest point in at least 22 months because to this improved confidence. According to a recent survey by the digital asset research company Kaiko, peg stability is crucial for the majority of stablecoin investors and trumps worries about issuer transparency.

However, concerns have been raised regarding the substantial increase in the market capitalization of USDT, which Kaiko described as “inordinate.” This rise contrasts sharply with the multi-year lows in trade volumes that were seen during the same time period. In general, the trading volumes of other stablecoins and their market capitalisation have tended to be correlated.

In spite of market trends, Tether’s USDT has managed to surpass its previous all-time high market value. The apparent stability of USDT has attracted stablecoin holders, making it the ideal option in these uncertain times, even as worries about transparency and regulatory monitoring persist. We’ll continue to keep a close eye on the stablecoin market’s development and USDT’s position as the leader.


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