Tether, the issuer of USDT, has ramped up its money-printing efforts recently, adding another $120 million to its wallets overnight. Where does this "liquidity" from the "Federal Reserve of Crypto" flow? This analysis provides insights.
The term "again and again" barely suffices! In March, Tether's issuance of USDT reached what could be described as "reckless abandon." The history of Tether's USDT issuance is filled with stories, and its position in the stablecoin realm—along with its business model—has drawn both criticism and envy. As the de facto "general equivalent" in the cryptocurrency world, whether this dollar-pegged stablecoin is truly backed by USD seems less of a concern today. Amid Bitcoin's post-pandemic surge and subsequent decline alongside global commodities—especially the March 12 crash—the market has one unified cry: liquidity shortage. With the Federal Reserve unleashing massive liquidity like an "ocean king," Tether's "money-printing" spree faces far less scrutiny.
In the early hours of March 25, Tether broke its recent pattern of issuing $60 million USDT at a time, releasing $120 million USDT in one go. Later that evening at 21:22, it issued another $120 million USDT—truly a money-printing machine at full throttle. But where does this "liquidity" flow? Here, we analyze the ERC20 USDT issued by Tether on Ethereum between March 12 (post-crash) and March 22, shedding light on the market's key players and their dominance.
Exchange Transaction Volume Breakdown
After the March 12 crash, Tether initiated a $60 million USDT issuance on Ethereum at 01:36 on March 13. By March 20 at 21:39, it had conducted 9 issuances totaling 540 million USDT. The longest interval between issuances was 4 days; the shortest, 7 hours. We tracked these USDT flows across 5 layers of transactions. From 771 identifiable transfers to exchanges, we recorded a total of 508,188,491.03 USDT.
Key Findings:
- Binance received the most: 221,673,689.89 USDT (43.62% of total), across 273 transfers (35.41% of total).
- Huobi followed: 151,945,464.98 USDT (29.90%), via 395 transfers (51.23%).
- Bitfinex (linked to Tether) ranked third: 116,490,653.83 USDT (22.92%).
Collectively, these three exchanges absorbed 96.44% of the issued USDT—a logical outcome. Like the Federal Reserve, Tether channels liquidity through institutional partners before it reaches the market.
Why These Exchanges?
- Binance: Dominates spot trading globally, acting as a liquidity hub for USDT pairs. Historically, major OMNI/TRC20/ERC20 USDT migrations were initiated here.
- Huobi: Rules OTC markets, serving as a bridge for users converting fiat to USDT before trading elsewhere.
- Bitfinex: Tether’s sister exchange, with deep integration.
Daily Transaction Trends
- Peak Activity: March 20 saw 146 transfers (145.78 million USDT), accounting for 28.69% of total volume.
- Lowest Activity: March 13 had just 9 transfers (52.63 million USDT), making up 10.36%.
Market Context:
Post-March 12, surging trading activity (analyzed in our prior article) revealed a USDT shortage. Demand outstripped supply, driving USDT’s off-exchange premium to ~6%. Tether’s issuances alleviated this, gradually reducing premiums and lowering trading costs—actions welcomed by traders.
👉 How Tether’s Strategy Stabilized Markets
Tether’s issuance spree continued beyond our observation window:
- March 24: $60 million
- March 25: Two separate $120 million issuances
- ...and counting.
FAQ: USDT Issuance Explained
Q: Why does Tether keep printing USDT?
A: To meet liquidity demands during high volatility, ensuring traders can execute orders without premium costs.
Q: Is USDT fully backed by USD?
A: Tether claims 1:1 backing, but audits remain limited. Market focus has shifted to utility over collateralization.
Q: Which exchanges benefit most from USDT inflows?
A: Binance, Huobi, and Bitfinex collectively capture ~96% of tracked distributions.
Q: Does USDT issuance affect Bitcoin’s price?
A: Indirectly. Increased liquidity may stabilize or boost prices by easing sell pressures.
Q: How does USDT’s premium work?
A: When demand exceeds supply, buyers pay more than $1 per USDT OTC. Issuances aim to balance this.
Source: Original Analysis
(Republished with author consent. Views expressed are solely the author’s, not representing Zombit’s stance.)
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