• USDT trading activity has hit a 4-year low, despite its record market capitalization.
• The decline in trading volume is attributed to lackluster crypto trading and the reintroduction of trading fees for USDT asset pairs.
• CoinGecko’s data reveals that USDT’s daily trading volume has plummeted below $10 billion over the weekend for the first time since March 2019.
USD Tether’s Low Trading Activity
Trading activity involving Tether’s USDT stablecoin has hit multi-year lows, despite its impressive all-time high market cap of $83 billion. According to cryptocurrency market research firm Kaiko, this decrease in trading volume raises questions regarding the token’s surge in market capitalization.
Decrease in Trading Volume Explained
The drop in USDT’s usage can be attributed to numerous factors such as lackluster crypto trading amidst a bear market and the reintroduction of trading fees by Binance, the world’s largest cryptocurrency exchange. CoinGecko’s data reveals that USDT’s daily trading volume has dropped below $10 billion over the weekend for the first time since March 2019.
Rise of Stablecoins
Stablecoins have emerged as an integral aspect within digital asset ecosystems due to their ability to bridge traditional currencies and cryptocurrencies with their combined market capitalization amounting to approximately $129 billion. With its remarkable surge in market capitalization, USDT remains the most widely used stablecoin among many others such as Circle’s USDC and Paxos’ BUSD.
Surge In Supply Outpaces Trading Volume
Kaiko states that it is peculiar that there is an increase in supply while actual utilization decreases, which could be indicative of investors stockpiling tokens rather than actively using them for transactions or trades on exchanges or decentralized networks.
To conclude, while Tether’s (USDT) stablecoin continues to experience remarkable growth with its impressive all-time high market cap of $83 billion, its actual utilization and therefore trading volume remain at a four year low due to reasons such as lackluster crypto trading and introduced fees by Binance exchange.