The USDT supply rate on crypto exchanges witnessed a massive increase in three months. According to Santiment, a high percentage of Tether on exchanges is a sign of high purchasing power in the market for 2 years. Binance CEO CZ had commented on what this meant months ago.
USDT volume on exchanges increased by 20% in 3 months
Data provided by Santiment shows that the supply of Tether (USDT) on exchanges has increased by 20% in the last three months.
The on-chain analytics resource tweeted that the rate increased from 19.7% on May 9 to 42% on August 10. Thus, the supply of USDT on exchanges reached over 42% for the first time since April 2020. Santiment interprets this as a sign of 2 years of high purchasing power. It also shows that investors are profiting as the crypto markets rally.
Tether continues to print USDT
Meanwhile, Tether minted 1 billion USDT on July 29. It has since added several billion more to its market capitalization. Many in the crypto community consider the increase in stablecoin supply to be a bullish signal.
Binance CEO commented on the data on Twitter
One of the people who commented on the increasing USDT volume of centralized exchanges was Binance CEO CZ. Changpeng Zhao said on Twitter in late July that investors were waiting for the right moment:
3 out of the top 10 (cryptocurrencies) are stablecoins, meaning there’s a lot of “fiat” sitting between them and ready to bounce back. If people wanted to get out of crypto, most stablecoins wouldn’t hold.
Independent research shows that the market has over $40 billion in liquid money. But Blockware analyst Will Clemente takes a different view. According to the analyst, there should be less stablecoins in the market as oversupply and lack of buyers could cause the crypto market to decline.
Will Clemente says that if the volume of a stablecoin in circulation decreases, the demand for cryptocurrencies increases. So, what kind of a picture does all the data reveal in general?
What the increased supply of USDT means for investors
As we can see in Santiment’s chart, the total supply of USDT on exchanges has more than doubled from May. The community witnessed a rate of 19.7% on May 9. However, this rate has increased to the current 42%. The chart also shows an increase recorded especially in June when the markets crashed. This signals the move of investors to buy the bearish or capitulation. Santiment analyzes interprets the current environment as:
The increase may indicate that institutional and individual investors are showing an interest in entering the markets and that there is an apparent recovery. This means a high purchasing power, last seen in early 2020.
With the markets showing signs of reversal, most investors will want to profit from the upcoming rally. As a result, they will try to increase stablecoins as they prepare to enter the transaction. USDT is the largest stablecoin by market cap. For this reason, the supply ratio in the stock markets is very important.
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