Tether's capitalization reached $117.5 bln in August, adding over $3 bln over the past month and $26 bln since the beginning of the year. However, after the company’s USDT market cap fell to $66 bln in 2022, this metric has been expanding with virtually no corrections. What is the reason for this?
The growth of Tether (USDT) capitalization to $117.5 bln and the steady uptrend in this indicator is attributable to several factors:
1. After the Covid crisis ended in 2023, the cryptocurrency market began to recover. This led to an increase in demand for stablecoins, including USDT, as a tool for entering the market and hedging risks.
2. The increased interest in cryptocurrencies from institutional investors led to an increase in the need for stable tokens to perform large transactions.
3. Tether is constantly expanding its footprint in various blockchain networks, thereby raising the availability and applicability of USDT.
4. In times of economic instability, many investors seek a safe haven, and stablecoins are often seen as an alternative to traditional assets.
5. The growth of decentralized finance (DeFi) is increasing the demand for stablecoins for use in various protocols.
6. Despite past controversies, Tether has been able to restore investor confidence by regularly publishing reports on its reserves.
7. USDT is often used for international money transfers due to low transaction fees and quick transactions.
The confluence of these factors contributes to the steady rise in USDT's capitalization and strengthens its position in the stablecoin market.