March was pretty difficult for traditional and cryptocurrency markets. The severe volatility of prices, the free-fall of Bitcoin turned lots of traders in panic. However, a stablecoin Tether (USDT) has emerged as the biggest winner of the cryptocurrency sector.
To compare with the world’s leading digital asset Bitcoin, which showed a 37% decrease in market capitalization since mid-February, Tether, on the contrary, has grown by 50%. Its market cap boasted nearly $2 billion USD since, currently being nearly $ 6,2 billion USD, according to CoinMarketCap.
The largest stablecoin in the crypto market is pegged to the US dollar and is known as a virtual currency used for transactions with little price volatility. The equivalent became particularly relevant to crypto investors as the value of other digital coins declined.
However, as more of them turn into the stablecoins, market experts predict the shift might increase volatility in crypto markets. Sid Shekhar, the co-founder of market tracker company TokenAnalyst told Bloomberg:
The more Tether there is in existence (and specifically the more sitting on exchanges), the more there is opportunity for sharp swings in price as traders can immediately buy in (or sell out) as opposed to the slower process of converting sending and fiat into crypto. This naturally lends itself to increased volatility.
On the other hand, the growing importance and influence of the USDT could make the future of other digital coins, such as Bitcoin more cloudy. Computing networks, that support blockchain, get payments mostly in Bitcoin or Ether (ETH). According to experts, if USDT becomes the main coin for payments, fewer computers will be lending their support.
Nic Carter, co-founder of crypto market tracker Coin Metrics, claims that dollar is gradually becoming the native currency of some public blockchains. He predicts, that if native currencies such as Bitcoin, lose their appeal as transactional media, the security of these networks might be impaired.
Reacting to the growing importance of USDT, the cryptocurrency industry starts adding the leading stablecoin for futures trading. This Monday KuMEX, the Bitcoin futures platform developed by KuCoin, added Tether perpetual contracts on the exchange. With the first stablecoin available on the platform, traders will be allowed to buy or sell USDT on predetermined prices however without an expiry date.