TL;DR
- Tether lied 1 billion USDT tokens on the Ethereum blockchain
- This generated speculation of a possible “stampede” in the crypto market
- The issuance coincides with the expected approval of an Ethereum spot ETF by the SEC
Tether, the world’s largest stablecoin issuer, has just injected an additional 1 billion USDT tokens into the Ethereum blockchain.
This move has fueled speculation about a potential rally in the cryptocurrency market.
šµ šµ šµ šµ šµ šµ šµ šµ šµ šµ 1,000,000,000 #USDT (1,000,359,999 USD) minted at Tether Treasuryhttps://t.co/i6scFY73OO
— Whale Alert (@whale_alert) May 21, 2024
The injection of liquidity by Tether coincides with the imminent decision of the United States Securities and Exchange Commission (SEC) on the approval of an Ethereum spot exchange-traded fund (ETF), scheduled for this week.
Paolo Ardoino, CEO of Tether, clarified that this issuance was part of the “inventory replenishment” and was an “authorized but not issued transaction.”
This means that the tokens will be used as holdings for future issuance applications and cross-chain exchanges, but are not yet in circulation.
However, market analysts see this move as strategic preparation for a possible rally driven by the expected approval of the Ethereum ETF.
Ivan Sherbakov, CEO of Cryptorobotics, speculated that this influx of liquidity will be used to “pump” the market ahead of the ETF announcement.
Historically, an increase in USDT supply has been linked to widespread bullish trends in the cryptocurrency market, leading to higher trading volume and a more vibrant environment for digital assets.
Concerns and considerations in Tether
Despite the potential positive implications for the market, some analysts have expressed concerns about Tether’s lack of transparency.
Deutsche Bank analysts have highlighted the potential risks associated with Tether’s significant market dominance.
With a total stablecoin market capitalization exceeding $160.9 billion, Tether holds a significant share.
These issues of transparency and market dominance continue to be debated among analysts and investors, even as Tether stock could trigger significant market moves if the ETF is approved.
Some fear that the lack of visibility over the reserves backing USDT could lead to a destabilization of the crypto market if investors lose confidence in the stablecoin.
Others believe that Tether’s great influence over market liquidity gives it disproportionate power.
