Block0, a cryptocurrency angel fund, today released a report on Tether, the market’s most traded stable coin. The report outlines the growth of Tether (USDT) over the previous year and sheds light on the current fear, uncertainty and doubt (FUD) surrounding the Tether project as it breaks its peg to the US dollar on several exchanges.
Tether, a stable coin pegged to the US Dollar and owned by Bitfinex, has grown from commanding less than 5% of market volume in Q4 2018 to almost 50% of volume with the same in Q3 2018. (Across fiat currency pairs USD, EUR, KRW, JPY, and GBP trading against the top-10 cryptocurrencies.
Representing 48% of trading volumes in Q3 2018, Tether was the dominant trading pair within the 10 largest cryptocurrencies. In comparison, total trading volumes for Q1 and Q2 2018 were $494bn and $311bn respectively, with a USDT share of 21% and 35% of total trading volume.
The market turns against Tether
Tether achieved its growth through direct partnerships with centralized exchanges such as Binance, Okex and Huobi. Due to the recent uncertainty around Tether’s future, exchanges are adding Tether alternatives: Binance has added Tether competitors Paxos Standard and TrueUSD, while Okex announced that they will be adding Gemini USD, Paxos Standard, USD Coin, and TrueUSD to their exchange.
Over the last two weeks, we have observed market demand for a new stable coin increase, with TrueUSD (TUSD), Gemini Dollar (GUSD) and Paxos Standard Token( PAX ) trading at a premium across a number of exchanges. On some exchanges, TrueUSD and Gemini Dollar have been trading at a 10% premium over Tether, a clear signal that traders are losing faith in Tether.
Commenting on recent events, Block0’s founder Manu Andorra said:
“We are observing a breaking point in the market for Tether. We have seen a prolonged period of uncertainty around Tether’s operations and with the introduction of competitors such as the Paxos Standard and TrueUSD, the market is moving towards the alternatives that put transparency at the forefront of their operations.”
He added, “Ultimately, all stable coins are still experiments, and the market will benefit from a larger range of stable coin solutions becoming available.”
Block0 believe that current events open an opportunity for another stable coin project to become the market leader. Tether grew extremely quickly in under a year – this demonstrates the possibility that a new market leader will emerge in an even shorter time.