Tether withdraws a quarter of all USDT from circulation

In recent days, Bitfinex and Tether Limited have been the focus of public attention. After both companies lost another banking partner, Bitfinex customers were unable to make any Fiat deposits for a while. This also raised doubts about the Stablecoin Tether and its coverage by the US dollar.

Both Bitfinex and Tether have now found a new bank that handles their business. Bitfinex is said to have received a bank account from Hong Kong-based Prosperity Revenue Merchandising Limited, according to The Block. Citibank is acting as an intermediary bank for US dollar transfers. Tether Limited is now to be a customer of Nassauer Deltec Bank in the Bahamas.

Tether taking coins out of circulation

Still, there were news about Tether during the last days. Tether did not issue any new tokens in October as the Omni Explorer shows. Instead, Tether Limited has sent a total of 690 million tethers (USDT) back to its treasury account seven times, taking it out of circulation.

A large part of the transfers (USD 580 million) have been made since 14 October. Remarkably, most of the transactions did happen either or just before USDT’s USD bond decline, as the USDT price slid up to $ 0.92.

tether treasury

Overall, Tether Limited has taken more than a quarter of all tethers out of circulation. The number of USDT has fallen from around 2.8 billion to just 2.008 billion. The last issue of Tether was on September 21, when market capitalization increased to just over $ 2.8 billion, reaching a new all-time high. Tether still still below the 1$ mark.

Strengthening of other stablecoins?

One possible explanation for the weakness of Tether could be the strengthening of other (new) stable coins. Tether users could have exchanged them for one of the newly introduced “regulated” stablecoins, such as the Gemini Dollar, Paxos or the somewhat longer existing TrueUSD (TUSD).

A look at the market capitalization of each stablecoin shows that there was a significant increase for competitor coins, but not to the extent of 600 million USD. TrueUSD has seen the strongest increase.

Since October 1, the amount of all TrueUSD increase from around 100 million to 160 million. Regarding the Gemini Dollar, Coinmarketcap does not currently offer market capitalization data. However, trade volume increase significantly.

Before October 14, daily volume was below $ 50,000 for the Gemini Dollar (GUSD). After October 14, the trading volume increased temporarily to more than 14 million.

Paxo’s market capitalization increased significantly from 13.5 million (before 14/10) to more than 64 million. There are currently around 42 million PAX in circulation.

Comparing the 3 competitors in total (USD 200 million + X GUSD) with the 2 billion of tethers, the competing stable coins are far behind the market leader. Nevertheless, there could be a change in the near future. Should investors continue to loose faith in Tether’s reliability and ability to payout, it could be faster than expected.


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