FOMO

when

Rise

<h2 id="key-points">Key Points</h2> 
<ul> 
 <li>USDT’s demand and supply signals often conflict, making it a crucial asset to monitor.</li> 
 <li>Amid market volatility, stablecoins like USDT are becoming increasingly attractive alternatives.</li> 
</ul>  
<p>USDT, also known as Tether, often presents conflicting demand and supply signals. Hence, it is important to keep a close eye on this digital asset. </p> 
<p> With the current market volatility, stablecoins like USDT are becoming more appealing.</p> 
<h2 id="the-rise-of-usdt">The Rise of USDT</h2> 
<p>Often referred to as the digital dollar, USDT has managed to maintain its $1 peg. It has evolved from a niche asset to a highly demanded tool for seamless transactions. The global stablecoin supply recently reached a record $190 billion, with over $60 billion added since the start of 2024. However, the demand and supply dynamics in the crypto world give this a different perspective. </p> 
<p>USDT is the most widely used stablecoin in the crypto market and has served as a safety net during unstable market conditions. The trend is currently repeating. </p> 
<p>In early December, Bitcoin surpassed $100K and reached a new all-time high of $104K. This led to a decrease in USDT dominance to a 6-month low of 3.80%. However, with the uncertainty around Bitcoin’s next market peak, the volatility is increasing. This could lead to more investors seeking the stability of USDT. </p> 
<h2 id="usdt-demand-and-supply">USDT Demand and Supply</h2> 
<p>From an economic perspective, supply increases to meet the rising demand. The stablecoin supply reaching $190 billion, with $60 billion added this year, indicates a rapidly growing demand for USDT. In November, whales increased their USDT accumulation, acquiring over $2 billion across four separate time periods. This strengthens the role of stablecoins as a hedge against high-risk assets. </p> 
<p>However, rising USDT demand doesn’t necessarily mean a market downturn. It could potentially indicate the opposite. For instance, after the election results, when whales acquired over $2.5 billion in USDT, it was a precursor to a major rally. </p> 
<p>The chart above indicates that whales have significantly reduced their USDT holdings in the last two days, from over $2 billion to a -$240 million position. This shows strong conviction in upcoming gains. However, the retail sector seems to be taking a different approach. There has been an increasing withdrawal of USDT from exchanges since the start of December. </p> 
<p>Bitcoin’s four failed attempts to break $100K, concerns over its overvaluation, and a lack of FOMO are making investors more cautious. Thus, traders are either chasing quick, big gains in mid and low-cap tokens or seeking stablecoins as a safer bet. </p>

Is The $190B USDT Supply Surge a Flight to Bitcoin or a Safety Net for Investors?

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CoinEagle.com

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