Stablecoins are a game-changer in the crypto market. They provide two key benefits: high liquidity and a safe haven for investors during periods of high volatility. These factors have fueled their rapid adoption.  Tether's USDT is the current leader, boasting a market cap of $105 billion, which makes up a whopping 69% of the entire stablecoin market share ^[1].

Despite facing legal challenges in the past ^{[2, 3]}, Tether has emerged as a dominant player in the cryptocurrency market. Its USDT stablecoin is widely accepted, integrated across 16 major blockchains ^[4]. Tether further bolsters its position by holding the 16th largest stake in US Treasury bonds ^[5]. Additionally, the company is involved in Bitcoin mining ^[6] and holds a significant amount of BTC, currently around 75k BTC valued at roughly 5B USD ^[7].

Back in 2017, the idea of Tether thriving in 2024 as the dominant stablecoin seemed far-fetched. Yet, here we are. But Tether's skyrocketing market cap has raised concerns. Many fear potential consequences for the crypto market if Tether's reserves aren't enough to truly back every USDT in circulation (meaning a 1:1 collateralization).

However, an increase in USDT supply can indicate new money entering the cryptocurrency market. Since USDT is frequently used to buy other cryptocurrencies, this can lead to increased buying pressure, potentially pushing token prices up and contributing to a bullish trend. I think if Tether keeps issuing new USDT, it suggests that there's still demand for stablecoins, which could be a sign that investors are still entering the crypto market and the crypto market is still in an uptrend.

I own USDT. I'm using Binance Simple Earn to earn interest on my USDT while I slowly buy Bitcoin  through DCA strategy. USDT also helps me hedge against the weakening of my local currency compared to the USD. I hope the USDT market remains stable until I can convert my holdings to cash after uptrend.

I would like to know your views on Tether:

• Is USDT safer than other stablecoins in the market?
• Are Tether and USDT really important for the development of the crypto market?
• Could Tether collapse in the future?

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References:
[1] DefiLlama: Stablecoin Overview
[2] Cryptocurrency firms Tether and Bitfinex agree to pay $18.5 million fine to end New York probe
[3] CFTC Fines Tether and Bitfinex $42.5M for ‘Untrue or Misleading’ Claims
[4] Tether Token (USDT) to Launch on Celo
[5] Tether: the Q4 2023 report shows stellar profits
[6] Tether plans major expansion into BTC mining with $500M investment: Report
[7] Tether becomes seventh largest Bitcoin holder with recent $618 million purchase

What you are doing is what most here will do but did you ever check the APY that Binance is giving on USDT? It is more than any other cryptocurrencies that are listed. Doesn't it look concerning and sound weird as it is a stable coins pegged to USD.




1. Since it is the first stable coin that is the reason for its popularity and adoption. It is not at all safe to use USDT and I cannot comment on others.
2. It is important depending on the usage, a trader would like to park his funds in USDT in an unstable market. An employer will want to avoid unnecessary charges and delays that he will incur using fiat by using USDT to pay his employee.
3. If USD collapses then USDT will also collapse.

first, in my opinion I think that the most safe stablecoin are the ones that get backed up by real USD 1:1 only then its safe or at least its backed up by real asset that don't fluctuate that much we are talking about stability of stablecoin so of course we should also find stablecoin that are backed by stable asset, so if USDT is backed up by these and is audited frequently I think its safe, but i can be wrong of course since im no expert at talking about economic like this.
second, I believe that stablecoin does help in preserving value of wealth for many people there's always reason that the market cap of these stablecoin could grow so high so the fact that these market cap for stablecoin could grow so high means that it helps people dealing with investing or trading a lot, even more so for those that interact with blockchain.
for the last question though, I think nobody know about it, algorithmic stablecoin back then like UST was said to be safe enough until it collapse, so nobody knows.

No. Many have expressed their concerns regarding Tether’s inability to be completely transparent. Tether has a history of not complying to appropriate regulations and not showing proper records and data. On the other hand, there is another stablecoin USDC that is known for being more transparent and safe compared to USDT.


Yes, it provides investors and traders to convenience as they can now easily buy and sell the coin of their choice. It helps people to fight off volatility of the market.


If they don’t start working on their records and transparency, there is a chance that SEC might be the one themselves to pinpoint Tether’s flaws. If that happens, tether would be in huge trouble.[/list]

USDT team has a large backup in their disposal. They are also one of the whale of bitcoin and they have invested in many assets, so even if USDT depegged it will be short lived. The only time i can see a major correction in USDT is if the government wanted to crack down on the whole company. But for being so big, the seizure of USDT will be catastrophic for the whole crypto industry i don't think the government will do anything like that. But still USDT can be dppegged as it is been done before already.

Despite that many arguments don't like Tether. With their expansion and global usage, we can't deny that they're one of the most used stablecoins even if we're going to see some CBDCs from different countries and the exchange backed stable coins, many traders and holders prefer to get their holdings into Tether. And as a signal to the trend in the market, somewhere in 2017, they've made a noise about their printing and you know what happened next? Bitcoin's ATH goes to $19k-$20k.

     For me, there are only two stablecoins that are quite okay to use and these are usdt, and usdc or usd. But often if it is used it is the usdt because it is my only p2p option to exchange it to our fiat currency here in our country.

     Now, if the opportunity comes that I can use other stablecoins to exchange the crypto I get, I think it's fine with me as long as the issue is if I have earned crypto that needs to be exchanged for a stablecoins held of a project is fine I guess.

I think USDT cap only has meaning related to the flow of money in or out of the crypto market, not related to the demand to buy or sell crypto. The buying and selling of crypto-stable coins is seen as a swap activity between two people, the total amount of crypto and stable coins does not change, only the price of crypto will change according to market demand.

Money flow into the market can go through many channels like OTC or P2P but stable coin is still one of the most important and popular channels, and it can be easily tracked. Currently, although the market is sideways, USDT continues to be minted, I continue to believe and be greedy instead of being afraid!

In general I think centralized stablecoins like USDT are a double-edged sword. Personally I use them only to park small amounts for a short time.

The problem is that the stablecoin operators are an additional entity you have to trust, aside from exchanges. I would never hold more than very small USDT amounts on an exchange or centralized wallet, because both Tether and the exchange could go bankrupt.

But there's an additional problem not all stablecoin holders are aware of: Most stablecoins, including USDT, can be blacklisted by the operator. I interpret that if you are unlucky, you could be buying USDT at an exchange, withdraw them, and a few hours, days, or even months later some other entity (e.g. another exchange) discovers that these USDT are connected to a hack or theft. Your coins could thus be frozen and I imagine to "unfreeze" them must be a big hassle (I guess you'll have to KYC and show the origin of the funds).

In general, the stablecoin supply tends to grow not only in bull markets, but also in the first phase of the following bear market. See this chart about USDT supply:

You can see that the long term trend is going up together with the cryptocurrency market cap, but there is a delay compared to the price curve. You see that after 2021's November high, the USDT supply continued to grow until May 2022 (this was when Terra/Luna collapsed) and then retracted. I interpret this in the following way: In the beginning bear market, many will try to cash out, and thus the USDT demand goes up even if the crypto prices themselves are already sinking. So no, I would not trust stablecoin supply as a significant metric "that we are in a bull market".

To your questions:


I personally think that USDC may be a little bit safer because its operator, Circle, is a regulated US company (and they are going public soon, it seems, which would make USDC even safer). iFinex (USDT operator) instead is located on a known "tax haven" (British Virgin Islands).
Dai is safer in another way because it can't be frozen. It has however other risks, it can depeg easier, and there is also a kind of "emergency shutdown button" which will be activated if something goes wrong.

I think not, they aren't too important; smaller altcoin exchanges are the only entities benefitting from it because it allows them to offer an USD-pegged value without a "fiat ramp". Specially I think it's bad that the stablecoin market is so concentrated on USDT, because while I think the risk they're collapsing is low, the risk that this collapse would affect the market is high. Take Terra/Luna, which was a small stablecoin but was able to dip the BTC price 30% or even more (we don't know how much of the May 2022 crash was caused directly or indirectly by Terra/Luna).

I don't think it's as likely as some FUDsters want to make us believe, but it isn't impossible at all.