Markets

Tether (USDT) saw a higher premium against the US dollar in April

Tether (USDT) has been trading at a premium against the US dollar since the banking crisis began in March, continuing a trend that has seen supply and market control surge to previous highs.

According to CoinMarketCap data, USDT is trading at $1.0007 after gaining 0.06% in the past 24 hours. This price performance is not a one-time event, as the stablecoin was trading mostly at a premium against the US dollar throughout the month of April on centralized exchanges, according to blockchain analysis firm Kaiko.

Tether Trades at Premium (Source: Kaiko)

USDT Dominance: Supply returns to previous highs

USDT supply and dominance are back at their highest level since the Terra reservoir collapse in May 2022, according to data from BeInCrypto.

According to the data, USDT supply increased by more than $15 billion by year-to-date metrics to $81.67 billion, while its market dominance rose to nearly 63% from 48% recorded at the start of the year. USDT’s growth coincided with the regulatory and banking issues of its main competitors, USDC and Binance USD (BUSD).

Tether Dominance (USDT)
USDT Dominance (Source: devilama)

The amazing growth of Tether has divided opinions within the community. Some players in the industry have pointed to its opaque reserves as a gray area that needs to be addressed. Mario Entertainer Crypto Investor He said:

“Growth of ropes is very scary and very dangerous. Who is reviewing that money and is it really insured or subsidized?”

However, A.J statement One of the stablecoin issuers said it was the target of “cover-up and outdated, inaccurate, and misleading claims.”

Meanwhile, USDT dominance may be good for BTC as analysts claim that there is a correlation between USDT supply and Bitcoin price hike. a Stady From BDC Consulting states that the supply of USDT has a “strong and significant relationship” with the price of BTC.

USDC and BUSD struggle

While Tether continued to rise in 2023, the USD/USD pair struggled significantly after encountering various issues.

The supply of BUSD has fallen below $7 billion after peaking at $22 billion in November 2022. Its issuances began in February when the New York Department of Financial Services (NYDFS) ordered Paxos to cease minting other coins. Its adoption and usage declined further when Coinbase delisted it and Binance removed its zero trading fee feature.

Supply of USDC stablecoins
View USDC (Source: BeInCrypto)

On the other hand, USDC lost its currency peg to the dollar in March after the US banking crisis. BeInCrypto reported that the stablecoin issuer holds part of its reserves in a failed Silicon Valley bank. While USDC has regained parity with the dollar, investor confidence in cryptocurrencies remains low.

According to data from BeInCrypto, USDC supply shrank by more than $14 billion in 2023.

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