Tether Stablecoins: the reasons for the increased demand for the cryptocurrency and the risks of investing in it
Among digital coins, or stabelcoins tied to physical assets, USDT, the cryptocurrency of company Tether, holds a special place. Many trades are made in this digital currency because it is pegged to the U.S. dollar at a one-to-one ratio.
Tether is in the top three in terms of capitalization
From its establishment until now, USDT has literally skyrocketed in the rankings of cryptocurrencies in terms of both trading volume and market capitalization. It is now in 3rd place, behind only bitcoin and ethereum. In 2017, half of the cryptocurrency pairs traded in bitcoin, and only 5% traded in Tether Stablecoin. Four years later, about 70% of currency pairs are trading against USDT.
According to buy and sell order statistics, which can be viewed at https://cryptex.net/trade/USDT20USD, the demand for these stable digital coins continues to grow. In just one year, the capitalization of Tether Coins has quadrupled. The other stabelcoins are lagging far behind:
USDC Circle, 8 times;
TrueUSD – 48 times;
Gemini Dollar (GUSD) – 1,000 times.
These values clearly show the dominance of the cryptocurrency tied to the U.S. dollar. Tether continues to issue its Stablecoin continuously.
Quote. Paolo Ardoyno, CTO of Tether and BitFinex: “Derivatives exchanges set transactions in Tether, in addition, at the time of the March crisis, trading platforms moved unsecured gold and other precious metals money into USDT, considering it a flexible asset. And the consequence of this is an increased demand for Tether.”
What are the risks of investing in stable digital coins
Stablecoins have drawn the attention of the U.S. Securities and Exchange Commission. The SEC’s crackdown on XRP (Ripple) has led many trading platforms to refuse to allow this cryptocurrency to circulate on them. If any sanctions are imposed on USDT, it is highly likely that a drop in Tether is inevitable.
But traders still prefer USDT, as this asset has high liquidity. Meanwhile, experts in the field of stock trading advise to pay attention to EURS and USDC. Let the capitalization of these tokens compared to Teter is insignificant, but they are more secured with real assets.
For the record. Tether has the largest share in the stablcoin market. Any radical decision by the SEC regarding this token will lead to market panic on all major exchanges.
The fall of USDT, if significant, will lead to a drawdown of the entire cryptocurrency market. Exchange speculators are well aware that the crisis will affect their profits. Traders, especially in the near future, will not allow a trend reversal. But that doesn’t rule out the risks of investing in Tether Stablecoin. Investing in USDT is just as much an investment as in other high-yielding assets. In order to exclude risks, it is necessary to resort to diversification of the investment portfolio in any case.