Markets
Crypto Market Feels Cold as Tether Growth Freezes
June saw a notable slowdown in the supply growth of stablecoin Tether, signaling a tightening of liquidity in cryptocurrency markets.
A recent study by Copper, a cryptocurrency custodian, highlighted that the stablecoin’s monthly supply expansion was less than 1.5% on June 24, marking a significant reduction from the more than 5% growth seen in April and May. .
Decline in Tether trading volume
Fadi Aboualfa, head of research at Copper, commented on the situation, noting that the moderate influx of liquidity into crypto markets is occurring amid downward pressure on Bitcoin and Ethereum, with altcoins showing little potential for a significant recovery in the near term.
In stark contrast to the start of the year, Tether’s trading volume plummeted from its all-time high of $767.22 billion on March 11 to just $53.55 billion on June 24.
This decline comes despite Tether boasting a market capitalization of $113 billion. The slower growth rate of USDT supply is indicative of decreasing financial flows in cryptocurrency markets.
Total Tether (USDT) traded on the market. Source: Glassnode
The Bitcoin market itself has not been immune to these challenges, with substantial daily capital outflows. Copper’s analysis indicates that more than US$540 million was removed from the market in the last week alone.
Over the past 30 days, the price of Bitcoin has fallen more than 10%, falling from approximately $68,000 to around $62,000.
Aboualfa further detailed the market dynamics, highlighting that despite the direct correlation between market flows and the price of Bitcoin, the current situation does not reflect bullish demand, but rather a hesitation among investors to sell their holdings at a discount. , even amid fears of a fall.
Impact of ETFs on Bitcoin price
Furthermore, since the introduction of exchange-traded funds (ETFs) in January, the price of Bitcoin has increased by 37%. Despite this, Aboualfa maintained that Bitcoin is still trading within a reasonable range of its holdings, suggesting there is still room for downward price movements.
The broader macroeconomic outlook also continues to exert pressure on crypto markets. An ETC Group report dated June 25 indicated that traditional financial markets have started to lower their expectations for global growth.
This reassessment is largely due to consistently disappointing US economic data. The Bloomberg US ECO Surprise Index, which measures the disparity between actual macroeconomic data and forecasts, has reached its lowest point since 2019.
This metric confirms the widespread recognition of the deterioration of the macroeconomic climate, which could pose new challenges for Bitcoin’s price stability.
Tether’s strategic shift
In a strategic shift, Tether announced that it will cease issuing new USDT tokens on several other blockchains, including Eos and Algorand, starting June 24.
Over the next 12 months, Tether will continue to redeem USDT on these blockchains as usual, with possible additional changes to be evaluated and announced at a later date.
Tether explained that the decision to discontinue minting Eos and Algorand is in line with its broader strategy of maintaining balance within its ecosystem.
The company emphasized that it conducts thorough assessments of the security architecture of each network to ensure the security, usability and sustainability of the blockchain.
The goal is to allocate resources optimally to increase safety and efficiency while promoting innovation. Tether assured its community that the transition would be executed meticulously to minimize disruptions, reaffirming its commitment to providing a seamless user experience.
Despite these changes, Eos and Algorand collectively account for less than 0.1% of the total USDT supply. As Tether continues to phase out support for certain blockchains, it remains active in integrating new networks, including The Open Network (TON).
Since the introduction of TON-based USDT in April 2024, Tether has minted approximately $500 million of these stablecoins, representing about 0.44% of the total circulating supply.
The first Tether tokens were issued on the Bitcoin blockchain through Omni in October 2014, and Tether has since stopped minting USDT on three blockchains in August 2023, including Kusama, Bitcoin Cash SLP (Simple Ledger Protocol), and the USDT blockchain original, the Omni layer protocol.