Tether’s market cap has fallen during the past three weeks from just above $2.7 billion to around $2.4 billion for only the second time in any noticeable manner.
The first time was during a one week period in May when crypto prices saw a previous low. Then it fell from $2.4 billion to $2.1 billion, to then rise again, but it apparently couldn’t hold.
In contrast, Tether’s market cap has seen only an upwards direction since 2016, until recently when it begun falling.
The tokenized dollar peg tracks the price of USD, with one tether usually equal to $1. That means some $300 million has probably been taken off the crypto market and into fiat recently.
Details of how the peg is maintained exactly are unclear, but one theory suggests it is mainly through exchanges which then send dollars to Tether to tokenize them or send tokenized dollars to Tether in return for fiat.
Much controversy surrounds this project due to a lack of audit to show they are fully backed, but one law firm said they had checked balances with Tether’s banks which confirmed they have the funds.
This conversion to fiat, therefore, might suggest reduced demand for crypto trading with more individuals seemingly going into dollars than cryptos.
Its usage is mainly limited to exchanges that do not have fiat pairs, but only crypto to crypto trading such as Binance.
However, a number of local exchanges in South Africa, South America and other locals, have begun adding USDT trading pairs to make arbitrage easier and close persistent premiums that exist in some places.
The token thus has found considerable use, especially during the bull market, mainly because its transfer is far easier than actual dollars.
Yet now it appears it is seeing lower demand, with at least $300 million of it choosing to go into fiat, at least for now.