Tether has long been used as an escape to stability when Bitcoin crashes. The inflow of capital re-entering the cryptocurrency market also helps boost valuations during bull runs.
With over $ 9 million in failures and rises, could all this capital be waiting to get into Bitcoin at the first sign of an outbreak? Or has Tether developed new use cases that fuel the enormous growth in 2020?
Tether's unstoppable, growing dominance of the market offer over Crypto
Cryptocurrency stablecoins like Tether, USD Coin and Paxos Standard are all 1: 1 pegged to the dollar. Each asset is covered by a corresponding dollar or equivalent asset.
These assets act as a stable peg to the dollar and have long been used as a safe haven during the volatility of the crypto market. During drawdowns – the majority of the past three years – stablecoins are particularly valuable for crypto traders.
Moving capital from Bitcoin, Ethereum, Ripple and other altcoins to stablecoins can protect wealth from loss. It also holds capital in the cryptocurrency market rather than paying it off to Fiat.
Related Reading It's official: Tether Flippen's XRP after the recent crypto crash
All capital remains on the sidelines and is waiting for an upward trend to begin. Then crypto traders will use the USDT to take positions.
If all of these USDT are marginally waiting to find their way into the BTC, it could give a significant boost to Bitcoin's next bull run.
Tether's market cap has now risen to over $ 9 billion. The following comparison table shows the growth in Tether's market cap has started to outperform Bitcoin price growth.
Bitcoin BTCUSDT Tether Market Cap Comparison | Source: TradingView.com
Is this money no longer waiting for Bitcoin or has USDT found a new use case?
Over time, stable coins have become more valuable than the dollar to which they are pegged. Dollars are stable, but their movement is often costly and requires an intermediary.
Since stablecoins are cryptocurrencies based on blockchains like omni-layer Bitcoin, Ethereum and others, you can move money quickly, easily, and inexpensively. And because they are pegged to the dollar, the stability that gave these assets their names is preserved.
Related Reading The crypto market's most accurate tool says the new BTC uptrend is here
This gives them flexibility that the dollar cannot yet achieve and may become a strong use case outside of a safe haven during downtrends.
Tether's growth may be less linked to Bitcoin than it used to be. Regardless of bullish moves on Bitcoin, much of the USDT offering could remain parked there for some reason.
However, not everything would remain in the stable coin, and at least part of it would flow into the first cryptocurrency. Along with the new Fiat and the final market entry of institutional money, any stall coin inflow could be the last ingredient missing for Bitcoin's next bull market.