DeFi
Tether, Circle Add $1.3 Billion in Single Day as Ether ETF Odds Improve – DL News
- The two largest stablecoin issuers together issued $1.25 billion worth of stablecoins on Tuesday.
- The emergence of new stablecoins is a sign of increased demand for exposure to cryptocurrencies.
- The total market capitalization of stablecoins has increased by approximately $30 billion since the beginning of the year.
New stablecoins are being created at a rapid pace in 2024.
Almost $30 billion have been hit so far this year, with an increase on Tuesday, likely due to the increased odds that the Securities and Exchange Commission will approve Ethereum spot exchange-traded funds THURSDAY.
The two largest stablecoin issuers, Attached And Circleissued $1.25 billion in stablecoins on Tuesday. Tether issued 1 billion dollars USDT on Ethereum and Circle Minted $250 million USDC on Solana.
Typically, an increase in the supply of stablecoins is a bullish indicator as traders use stablecoins to purchase other cryptocurrencies.
Now, large amounts of stablecoins can be used to buy Ethereum in an effort to leapfrog traditional investors, especially given the prominence that Bitcoin ETFs have attracted near $16 billion in investments since their launch in March.
The process
This bullish trend is explained by the process by which Tether and Circle issue new stablecoins.
For both entities, currency creation begins with a know-your-customer, or KYC, process that includes standard identification checks and sanctions checks. Additional documents can also be requested as needed.
Tether allows anyone who passes KYC checks to create USDT, including individual traderswhile Circle only allows registered companies to mint USDC on a large scale.
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After passing a KYC check, users can deposit fiat currency into Attached Or Circle bank accounts. Funds are held in reserve to ensure that each stablecoin is backed by at least $1 of fiat currency or cash equivalents.
Tether reserves can be monitored hereand Circle’s reserves can be monitored here.
Once the funds are deposited, the stablecoin issuer confirms the validity of the deposit and issues the stablecoins to the provided wallet address.
To withdraw funds, users send USDT or USDC to the respective issuer.
The issuer then removes the stablecoins from circulation and transfers the equivalent USD amount from its reserves to the user’s bank account.
Cryptocurrency Request
An increase in the number of stablecoins issued indicates higher demand for exposure to cryptocurrencies, and a decrease suggests reduced demand.
With USDT, newly issued tokens can be “authorized but not issued”, meaning they are not included in the total market capitalization.
This method allows you to mix the mints together, reduce security risks by minimizing the number of interactions Tether requires with minting smart contracts.
For example, although Tether issued $1 billion USDT on Tuesday, according to Tether’s transparency page, $997 million USDT is considered permissioned but not issued on Ethereum.
Total market capitalization of stablecoins
Tether’s USDT is the largest stablecoin, with a market capitalization of $111.3 billion while Circle’s USDC is the second largest stablecoin, with a market cap of $32.7 billion.
Both stablecoins can be used on over 70 different blockchains.
Overall, stablecoin production increased in 2024 as total market capitalization increased to $160.6 billion from $130.8 billion at the beginning of the year.
This coincided with a general increase in cryptocurrency prices, as total market capitalization Cryptocurrency trading volume has grown from $1.8 trillion at the beginning of the year to $2.7 trillion.
Ryan Celaj is a data correspondent at DL News. Got information? Email him at ryan@dlnews.com.