Data shows the stablecoin Tether (USDT) has broken past $11 billion in market cap, making it one of the most valuable cryptocurrency as it joins Bitcoin and Ethereum as the only three coins to have an 11-digit market cap.
As Bitcoins and altcoins continue to increase in prices, demand for stablecoins continue to increase as well, allowing Tether to increase its market cap by 136% since the beginning of the year. Crypto traders and investors typically convert their fiat money to a stablecoin like Tether so they can first wait for the desired price before buying a specific cryptocurrency. Tether allows these traders to park their money (in USDT) in exchanges without fear of price volatility because the USDT is always pegged to the U.S. dollar. It also allows traders to sell crypto and then keep the money (in USDT) in exchange instead of cashing out.
The same case is true for other U.S. dollar-pegged stablecoins. However, their market cap is dwarfed by USDT by a sizable margin. The closest one, USDC by Circle and Coinbase, has a market cap of $1.08 billion, data provided by analytics firm Messari shows.
Tether was below $5 billion till February but experienced a spiked on March 12, the day of the market flash crash that saw Bitcoin’s price slumped to sub $4,000. Instead of cashing out for fiat, traders chose to keep the funds in USDT.
The market cap has increased since then. On June 29, Tether reached a $10 billion market cap. It took only four months for Tether to reach $10 billion while it took seven years for the stablecoin to reach $5 billion.
USDT remains the cheapest way to buy Bitcoin, news outlet Decrypt reported. Because of that, the inflow of USDT to exchange has increased around the same time Bitcoin made its ascent to $12,000. The outlet also revealed that if and when more institutional investors go to the crypto market, they will most likely buy stablecoins.