Tether’s USDT is the most popular stablecoin in the cryptocurrency world. At the same time, it too is susceptible to a decrease in exchange withdrawals. In fact, a four-month low was recorded just earlier today.
Fewer USDT Exchange Withdrawals
Depending on whom you ask the question to, fewer USDT exchange withdrawals are either good or bad. The positive aspect to this trend is how more liquidity resides on exchanges. Bitcoin and top altcoins are traded primarily against USDT, thus liquidity needs to be maintained at all times. Too much liquidity can trigger unnecessary market volatility, though, so it is a double-edged blade of sorts.
When such a low point occurs, one has to wonder what is going on exactly. It is not as if exchanges have suddenly stopped processing USDT withdrawals out of the blue. As Tether’s stablecoin is now issued across so many chains, it should only grow more popular. That is something to keep an eye on over the coming months.
With fewer USDT exchange withdrawals, it is possible traders are using the stablecoin to trade more frequently. Bitcoin and altcoins have proven to be somewhat volatile in recent weeks. Day trading and high-frequency trading carry risks, but can also yield greater rewards. Exploring this option should only be done with sufficient market knowledge and a high risk appetite.
Whether this is the proper explanation for a four-month low in USDT exchange withdrawals, remains unclear. It does not appear as if any negative sentiment toward Tether has been created. More specifically, no “new” negative sentiment. The recent situation involving BitMEX has made some people worry about Bitfinex and Tether, but for now, nothing has come of it.
Analyzing the Trading Markets
Looking at the top USDT trading pairs today, three of the five are tied to the US Dollar. This seems to confirm people are either converting from US Dollars to USDT, or the other way around. If it is the latter, that can explain why the USDT exchange withdrawals are decreasing. In times of financial uncertainty, a greenback in hand can be more appealing than a stablecoin.
In terms of overall transaction volume, Tether still ranks behind Bitcoin, but ahead of Ethereum and USD Coin. With nearly $3.6 billion in volume, the statistics look healthy. As such, this dip in withdrawals may be a temporary trend. All good things come to an end eventually, before a new trend can begin.