The data shows that Bitcoin volume is not affected by the dominance of the tether market (USDT)
Tether’s stablecoin USDT dominates cryptomarket volumes, but data shows that its market capitalization of USD 15.7 billion does not negatively affect Bitcoin volume.
Stablecoin Tether (USDT) has been the main base pair for cryptomarkets for more than eighteen months.
This is a pretty impressive feat given the ongoing court case with the New York Attorney General and the other frequent rumors that the USDT is not sufficiently supported or subject to the reach of regulators.
The USDT has also been the dominant stablecoin in China, despite the country’s ban on crypto currency exchanges in 2017. This is because large exchanges such as Binance, Huobi and OKEx used stablecoin as their main base pair.
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It is also worth noting that competitors such as USD Coin (USDC), TrueUSD (TUSD) and Paxos Standard (PAX) had a combined capitalization of USD 520 million in June 2019. During the same period, the USDT had already accumulated a market capitalization of over USD 3.1 billion.
In the last 15 months, Tether’s market capitalization grew to USD 15.7 billion, while its four largest competitors reached USD 4.1 billion. Despite all the controversies about the dollar support, the USDT has maintained a market share of almost 80% of all the stablecoins supported by the law.
An almost identical story can be seen in trading volumes, where Tether dominates with a 75% advantage.
Consolidated crypto volume by base pair
CryptoCompare data shows that the USDT has a market volume of almost 73% in the last three months. Before further research, it should be mentioned that the figures will vary from data provider to data provider, as some exchanges are often excluded due to a lack of transparency.
Despite these indiscrepancies, CryptoCompare’s Head of Research, Constantine Tsavliris, explained that
„In terms of trading Bitcoin in USDT or other equivalent stablecoins such as USDC or PAX, we haven’t seen a significant change in terms of volume.
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Stablecoins as an entry ramp for cryptomonies is irrelevant for the price of Bitcoin
Most traders have become accustomed to using Bitcoin (BTC) as the main gateway to crypto currencies. This solution could have been the only, or at least the most liquid for most traders in 2017 or 2018, but as the stablecoin market grew, the volumes of altcoin pairs with the USDT skyrocketed.
A wider range of altcoin pairs followed the higher stablecoin volumes, and as Coinbase, Huobi and Binance launched their own stablecoins, this trend accelerated.
It would be wrong to infer that the decline in the use of Bitcoin as the main entry ramp to crypt coins is detrimental to their price. Those who acquired BTC as an intern could have increased their volume, but used the same amount to sell it later in exchange for altcoins.
Also, even if one uses stablecoins as the main ramp solution, eventually, some of this flow will go to Bitcoin. Also, most cryptoactives are not direct competitors of BTC’s value and scarcity propositions.
Chainlink inflow and outflow past 24 hours
For example, the graph above shows USD 26.6 million in outgoing flow from Chainlink (LINK) to BTC in the last 24 hours. A similar trend occurred with the remaining altcoins, confirming that Bitcoin is not losing volume, as stablecoins are established as the dominant base pairs.
By analyzing the volume of the combined cryptcoin market, it can be determined whether stablecoins have been increasing their overall market share or simply taking markets away from Bitcoin.
Crypto total market 7-day average volume, USD billion
The above chart is probably surprising even for traders who experienced the late 2017 bubble. The average daily peak of USD 36.6 billion in January 2018 may have been excessive at that time, but it is rather timid compared to the current level of 100 billion.
Regardless of whether the false volumes impact this view, we can see that, proportionally, there has been a considerable increase. This volume growth coincides with the issuance of USD 3.6 billion in stablecoins in June 2019 to the US