Traders could be prepping to buy as USDT activity hits 6-month high
On March 12, a surge in onchain activity for Tether, the widely used stablecoin (USDT), was reported, reaching a six-month high. This uptick in transactions, as revealed by blockchain data platform Santiment, saw over 143,000 wallets participating on March 11 alone. Analysts are interpreting this as a possible indicator that traders are positioning themselves for renewed market activity.
According to Santiment, a rise in USDT and other stablecoin transactions often points to market participants gearing up to buy following price dips. “Added buy pressure aids in crypto prices recovering,” the platform noted. This recent increase coincided with Bitcoin’s (BTC) drop to a four-month low of $76,700 the same day. The decline came amid broader market volatility and macroeconomic uncertainties, leading to a recalibration of investor sentiment.
Vincent Liu, chief investment officer at Kronos Research, elaborated on this phenomenon, stating that traders frequently accumulate USDT during dips to better prepare for purchasing opportunities. He indicated that recent market fluctuations likely explain the spike in USDT wallet activity. Liu suggested that various factors, including economic uncertainties and regulatory changes, contribute to the attractiveness of holding USDT during turbulent times.
“Possible causes include broader economic uncertainties, crypto-specific events like regulatory developments or post-election sentiment shifts, and Tether’s role as a stable haven,” he said. Liu also highlighted that the recent decline in inflation rates to 2.8% could alleviate some of the pressures on crypto prices, fostering a more favorable investment climate.
The sentiment within the crypto community further reflects this development. After reaching “Extreme Fear,” with a score of just 10 on the Crypto Fear & Greed Index on February 26, sentiment has improved, climbing to a score of 45 by March 13, still situated within fear territory, but indicative of a possible recovery.
Tether’s CEO, Paolo Ardoino, is currently touring the United States as lawmakers discuss regulatory measures for the crypto sector. During a recent address at the Cantor Fitzgerald Global Technology Conference, he noted that about 37% of USDT users now utilize the stablecoin as a savings account, particularly in regions where traditional banking services are either limited or unavailable. Ardoino emphasized Tether’s role as a vital financial resource, allowing individuals to hold the US dollar in digital form via smartphones.
Additionally, Ardoino highlighted Tether’s position amid growing apprehensions about the dollar’s dominance in global finance. He stated that Tether represents one of the few remaining bastions for the U.S. dollar in the face of potential challenges to its status as the world’s reserve currency.
The stablecoin issuer has also been proactive in combating malicious activities within the crypto sphere, having collaborated on over 170 law enforcement initiatives and reportedly freezing $2.5 billion in illicit funds. These efforts showcase Tether’s commitment to bolstering its integrity and operational transparency amidst a shifting regulatory landscape.
