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USDT quantity on the rise: positive indicator for the cryptocurrency market

by Thomas

The amount of USDT in circulation has been rising since the beginning of 2023 and is recovering from the drop experienced following the FTX case. This could mark the beginning of renewed investor interest in the cryptocurrency market.

Tether’s USDT is picking up steam

The amount of USDT in circulation has surpassed a new high in 2023, a strong symbol of the return of speculation about a bullish recovery in the cryptocurrency market. After bottoming out at around $65.3 billion during the FTX deal, Tether’s stablecoin capitalization has climbed 4% to around $68 billion.

Tether's Cash Flow

Tether’s Cash Flow


As the figure above shows, the amount of dollars in Tether’s coffers has drastically decreased during the FTX deal in November 2022. This is a result of both the tokens lost on the centralized platform but also of investors fleeing the market and getting their dollars back.

Indeed, in theory, every dollar deposited at Tether is transformed into USDT that can be spent on the market. Of course, the reverse also works: it is possible to redeem your USDT to get dollars back. This is especially true during periods of panic.

At the moment, we are seeing the opposite. The increase in the total amount of USDT in circulation could thus symbolise a return of investors to the market. For analysts, this is an important point to watch for a possible bullish rally.

The USDT, a bullrun indicator

If we look back, we had seen the start of growth in the amount of USDT in circulation in 2019. This coincided with the start of a bullish rally for Bitcoin (BTC) which had risen from around $3,000 to over $13,000.

This was also the case between August 2020 and January 2021. The rate of increase in capitalisation was moderate, rising from $10 billion to $20 billion in 6 months. Thereafter, the slope steepened drastically as the market took off.

While these observations are purely speculative and are not sufficient indicators to declare a bullish turnaround, they are still positive elements to keep in mind.

Note that this week will be marked by important events that will most certainly give the market a direction in the short term.

In France, we will be watching for the announcement of the Consumer Price Indices (CPI) on Tuesday at 8:45am. This figure directly reflects the state of inflation in the country. On a global level, all investors will be watching Jerome Powell on Wednesday at 8pm, who will unveil the new monthly interest rates of the US Federal Reserve (FED).

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