Key Takeaways:
- Investors have been increasing Tether (USDT) supply on exchanges.
- USDT supply on exchanges has reached a multi-month high.
- Tether has also seen increased on-chain activity.
NEW DELHI (CoinChapter.com) — Tether (USDT) supply on exchanges reached its highest levels since March 2023, with over $10 billion worth now in reserves.
On-chain data provider Santiment also noted the spike in Tether supply on exchanges, highlighting that the stablecoin’s balance has risen by 40% since June earlier this year.
Unlike other crypto tokens, an increase in exchange balances for a stablecoin indicates a bullish mentality among market participants. Most digital assets, like Bitcoin (BTC), Ether (ETH), etc., often trade against USDT and other stablecoins.
As a result, an increased supply of Tether’s stablecoin, the largest by marketcap, suggests traders are getting ready to buy.
Tether’s Whale Supply Spiking
Furthermore, the on-chain data provider noted that USDT on-chain activity has spiked.
Santiment highlighted that USDT whale wallets, with $1 million to $10 million in USDT, have been accumulating Tether since mid-September. The blockchain data provider noted that the whale wallets bought nearly $142 million worth of USDT tokens since Sept. 15.
Furthermore, Tether also saw a spike in daily active addresses, with the metric reaching its highest level since July 14 earlier this year. Santiment claimed that the increase in exchange deposits likely resulted in a spike in active addresses.
Despite the threat of the Israel-Hamas conflict hanging over the markets, investors remain bullish towards risk assets like Bitcoin. Conversely, it is likely that market participants view the Tether stablecoin as a safe haven, given that the asset class often remains averse to wider market volatility.
USDT Finds Itself In FTX Controversy
Meanwhile, Tether has landed in a controversy after reports surfaced that Alameda Research, the sister firm of failed crypto exchange FTX, minted nearly $40 billion worth of USDT.
Conor Grogan, the director of Coinbase, stated that Alameda Research minted nearly 3 billion more USDT than previous estimates. As such, the firm was responsible for minting over 52% (at the time of writing) of the stablecoin’s total marketcap.
Grogan noted that “the amount of minted USDT was higher than Alameda’s AUM at the crypto peak, according to SBF data.”
The revelation raised concerns about the transparency of Tether’s operation. Interestingly, the stablecoin has never undergone an independent audit. Grogan noted that during the Terra implosion of May 2022, FTX seemingly redeemed 3.9 billion worth of USDT.
However, the Coinbase director stated that it was difficult to track USDT redemptions accurately. The revelations might result in raking up the reserves controversy that Tether faced in Oct 2022 after it slashed commercial paper holdings to zero in the wake of the LUNA disaster.
