Tether’s $5.25 Billion Injection: Will It Drive Bitcoin (BTC) Growth?

• Tether has extended its dominance in the crypto market with a $5.25 billion jump in capitalization.
• This growth surpasses the approximately $4 billion raked in by spot Bitcoin ETF products.

Tether (USDT), a stablecoin pegged to the US dollar, increased its market capitalization by $5.25 billion in March, raising questions about its potential impact on Bitcoin (BTC) and the general market.

Tether Surpasses $100B Market Cap Threshold

As shown in a recent YouTube video by Crypto News Flash, USDT has topped over $100 billion in market valuation and circulation, making it the first stablecoin to do so. This milestone was achieved following increased demand for Bitcoin, which traded at over $64,000. 

As of the latest data from MarketCap, USDT’s market capitalization has climbed to over $104 billion. This is a shift from roughly $98.65 billion at the start of the month, with a steady uptrend hidden by the month’s brief-term consolidation period.

Notably, the $5.25 billion added to USDT’s market capitalization bodes well for overall market liquidity since it provides a foundation that can help meet the demands of Bitcoin and other altcoins. 

For context, the combined spot Bitcoin Exchange Traded Fund (ETF) market has added less than $4 billion in net inflow this month. Because USDT liquidity is greater than the rise of the ETF’s Asset Under Management (AUM), it invariably means there is sufficient stablecoin to support the accumulation of both Bitcoin and other cryptocurrencies on exchanges.

It is worth noting that Bitcoin, often considered a market leader, reacts sharply to large inflows or withdrawals of capital. The world’s largest cryptocurrency frequently sees an upward momentum in price due to increased demand when a substantial amount of capital enters the market. 

That being said, Tether’s $5.25 billion investment could propel Bitcoin’s rise in the near to mid-term. One possible outcome is that investors may utilize the newly added USDT to buy Bitcoin, increasing buying pressure and causing the price to rise. However, this does not guarantee sustained growth or protection against market corrections.

USDT Dominates Stablecoin Market

Meanwhile, Tether dominates the stablecoin industry, accounting for over 70% of the $142 billion market, while Circle’s USDC has 19.4%. Despite its success, Tether has been scrutinized for its transparency and reserves. In 2021, it settled a complaint with US regulators, paying more than $40 million for false representations about its collateral.

In addition, OKX crypto exchange has delisted USDT for its EU customers amid tighter regulations, as Crypto News Flash had earlier detailed.

Despite these challenges, Tether recently launched a blockchain recovery tool to improve its consumers’ security and accessibility as formerly reported by Crypto News Flash. This tool enables the migration of USDT between blockchains in the event of outages, providing continued accessibility. Users can start this procedure via a web or command-line interface, ensuring a smooth experience. This initiative demonstrates Tether’s dedication to resilience and user protection in the crypto market.