Tether regains almost all of the lost value in the market after the fall…

bloomberg – stablecoin Tether is about to regain all of its lost market capitalization in the wake of the collapse of its algorithmic rival, TerraUSD less than a year ago.

Operator stablecoin It has assets totaling about $81.4 billion backing its USDT token as of April 21, according to data tracker. CoinMarketCap. The amount amounted to a summit From about $83 billion last May, when the collapse of Terra led investors to dump cryptocurrencies across the board. Tether assets fell about 20% in the second quarter of last year.

The recovery is a testament to the dominant role Tether plays in cryptocurrencies as a means of transaction and store of value. USDT, the world’s most traded cryptocurrency asset, aims to maintain a one-to-one redemption against the US dollar by relying on cash reserves. And the like. It briefly fell below $1 when TerraUSD imploded, and again in November when FTX failed. The quality of the assets Tether uses for this reserve has been called into question in the past, and regulators around the world have focused their attention on issuers. stablecoin.

Tether has benefited this year from the banking turmoil that has affected competitors such as the US dollar coin Circle, as well as the rally that sent Bitcoin, the market leader, up 70%. The amount of tether traded typically rises during rallies and flattens or falls modestly in bear markets, according to Alex Thorne, head of research at Galaxy Digital.

And large investors, often referred to as “whales,” also got out of profitable deals. Henry Elder, head of decentralized finance at Wave Digital Assets, said profits stalled in Tether.

Meanwhile, the evolving US regulatory environment is seen as driving more traders abroad. YouAether is headquartered in the British Virgin Islands. Circle, which has seen a near 30% drop in USDC assets this year, has run out of Boston.

“We are seeing a wholesale shift from one USDC to another stablecoins Less US-centric,” Elder said. This will continue as long as the US remains unreasonably hostile to cryptocurrencies in general and cryptocurrencies. stablecoins particularly”.

Hearings in the House of Representatives last week, which focused on stablecoinsto a deep disagreement between Republican and Democratic lawmakers. This probably does not bode well for the legislation..

At the same time, the US Securities and Exchange Commission and government regulators have stepped up enforcement action. Paxos Trust has stopped issuing it stablecoin Binance-branded BUSD after New York and SEC rejection.

BUSD’s market cap is down about 60% since the start of the year, according to CoinMarketCap. The SEC also declared UST, and stablecoin Their disengagement led to the failure of the Terra-Luna ecosystem, an unrecorded value.

“One of the biggest beneficiaries of the US enforcement approach has been Tether, which does not appear to be isolated from the SEC alone.“But it also hasn’t had any major incidents lately, which inspires confidence among investors,” said Conor Ryder, a research analyst at Caico.

Tether also appears to have benefited from the recent wave of financial institutions turning away from cryptocurrency clients. leave it stablecoins Like Tether as one of the few viable options for accessing cryptocurrencies.

This is ironic, as many market watchers still view Tether as a black box in many ways. Your reserves are not independently audited. Several years ago, he settled with New York for mixing up money and lying about reserves. The company has not admitted any wrongdoing.

“I can’t explain why people are investing in USDT,” said Campbell Harvey, a professor of finance at Duke University. “It’s very dark.”

–In collaboration with Emilio Nicolle.