The market cap of Tether’s USDT stablecoin has recently surpassed the $4 billion mark, an all-time high for the USD-pegged cryptocurrency that’s been in the middle of longstanding controversy.
According to available data, there are 4.02 billion USDT tokens in circulation, as over $1 billion worth of tokens have been minted since May 16, when the stablecoin’s market cap was still below the $3 billion mark.
In the beginning of the year, there were little over $1.8 billion worth of USDT tokens in the cryptocurrency space.
Some of the stablecoin’s supply increase is related to a jump in the number of Ethereum-based ERC-20 tokens. Data shows over 500 million USDT tokens were on the ETH blockchain in early June, while the crypto’s contract address now shows a circulating supply of 1.45 billion on its blockchain.
Most of it has seemingly already been allocated. While the circulating bitcoin-based USDT tokens still have $260 million left to allocate, the Ethereum address shows only $21 million worth of the stablecoin are left to be distributed.
Tether’s supply rise so far this year was accompanied by growing cryptocurrency price, as bitcoin went from a $3,200 low in December of last year to a $14,000 high this year before correcting. BTC is currently trading at about $9,500.
Some critics claim the stablecoin is used to manipulated cryptocurrency markets, and that Tether mints new tokens to help pump BTC in times of need. Earlier this year, Bitfinex and Tether – companies that share management – faced fraud allegations by New York’s Attorney General.
While there are studies to suggest USDT tokens have been used to manipulate bitcoin’s price back in 2017, there are also studies that found no evidence USDT issuances led to bitcoin price rises.
Earlier this year Will Harborne, founder of the Ethfinex exchange, noted that Tether printed about $600 million worth of tokens to meet demand from a number of wealthy clients who were looking to buy bitcoin before the flagship’s cryptocurrency’s price surged.
He was quoted as saying:
An OTC desk might do a large deal selling BTC to a large buyer in the US, and then will convert the dollars to Tether in order to spread the other side of the order across Bitfinex and Binance where there is more liquidity.
This means that according to Harborne, new Tether issuances indicate increasing demand from wealthy clients. Tether denies claims it isn’t doing anything nefarious such as manipulating cryptocurrency prices.