Tether Shifts $2B USDT to Ethereum Amid Bitcoin (BTC) Spike—Why This Matters

The crypto world was set abuzz when Whale Alert reported that Tether's Treasury minted an eye-popping $2 billion USDT on Ethereum in a single transaction.

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The crypto space was abuzz after Whale Alert reported that Tether’s (USDT) Treasury had minted a staggering $2 billion USDT on the Ethereum network in a single transaction on Feb. 23.

Such a significant minting naturally sparked speculations: Was Tether gearing up for a major market move? Could this influx destabilize the delicate balance of crypto liquidity?

Adding fuel to the fire, the timing seemed uncanny amid Bitcoin’s (BTC) recent rally to new all-time highs. Some feared an oversupply of USDT might flood the market, leading to sell-offs or a decrease in the purchasing power of the stablecoin.

The whispers grew louder until Tether’s CEO, Paolo Ardoino, stepped forward to shed light on the situation.

Tether Shifts $2B USDT to Ethereum

Addressing the swirling rumors, Ardoino explained that the notification of the minting was delayed and linked to a recent post on X (formerly Twitter). He revealed that Tether coordinated with a “prominent third-party exchange” to perform a chain swap, stating:

“The company had coordinated with a prominent third-party exchange to perform a chain swap, which involved converting part of their USDT cold wallets from various blockchains to USDT on Ethereum.”

Very very delayed notification.

Context:https://t.co/3Ps3qUxsBq

This wasn’t about increasing the total supply of USDT but reallocating existing tokens to where they’re most needed. By retiring USDT from less active blockchains like TRC20, Avalanche (AVAX), NEAR, CELO, and EOS and consolidating them onto Ethereum, Tether aims to optimize liquidity and meet the growing demand on the ‘World Computer.’

Specific figures from the swap include:

This strategic maneuver allows Tether to react swiftly to shifting user demand, ensuring that liquidity is concentrated where trading activity is highest. Although it’s a routine part of Tether’s operations, the scale of this swap is noteworthy and reflects broader trends in the crypto ecosystem.

Tether Liquidity Soars—$160B in a Day During BTC Spike

Despite a slight decrease in total supply — from 120.7 billion to 120.4 billion USDT — Tether remains the primary source of liquidity in both centralized and decentralized markets. About 85% of USDT’s total supply is actively used on typical trading days.

However, during Bitcoin’s recent surge, USDT’s trading volume skyrocketed, with over $160 billion exchanged in a single day — an impressive 132% of its circulating supply. This surge highlights USDT’s critical role in facilitating high-volume trading and its entrenched position as the stablecoin of choice, even as competitors like USDC attempt to gain ground.

The consolidation onto Ethereum meets current demand and positions Tether to handle future market dynamics more effectively. Moreover, Tether’s strategic reallocations underscore its commitment to maintaining over-collateralization with fiat and fiat-like assets, reinforcing confidence amid past concerns about its reserves.

The company’s recent report of a group net profit of $2.5 billion in Q3 2024 and $7.7 billion over the first nine months of the year further cements its financial robustness.