Tether is crypto’s “least risky” asset. As a regional U.S. financial crisis worsens and a governmental assault on crypto businesses intensifies, crypto investors, migrate into secure tokens and coins.
Tether, a stablecoin linked to a fiat asset like the dollar, has seen its market value rise since March. It has a supply ceiling of 85 billion tokens with a 1-to-1 peg to a dollar cache. The coin’s peg has remained over one since mid-April, reaching 1.002 last week.
“The banking crisis is fuelling ‘hyper-bitcoinisation’ – the inevitable endgame that the dollar will be worthless,” said Anders Kvamme Jensen, founder of the Oslo-based AKJ global brokerage digital asset expert.
Jensen said Bitcoin and ether had soared. Tether, a pegged stablecoin, is used as collateral for derivative deals and as a store of value. Conor Ryder, the research analyst at digital assets data firm Kaiko, says Tether’s premium demonstrates growing faith in the peg and SEC safety.
iFinex Inc., based in the British Virgin Islands, owns Tether and Bitfinex. The SEC’s monitoring of fintech and crypto businesses and Tether’s competitor USDC, administered by Boston-based Circle, have damaged USDC.
BUSD, another important stablecoin, has fallen after its makers said they would stop releasing new tokens after U.S. regulators labeled the asset an unregistered security. In addition, due to its odd tie to crypto and stablecoin reserves, the DAI token has stalled.
Tether’s regulatory risk is smaller since it’s less U.S.-focused. “Buying tether and bitcoin is really a vote against the U.S. system,” argues Jensen.
Tether has a market worth of $82 billion and a 6.83% stake in CoinMarketCap’s 23,891 coins. Certainly, Tether’s peg’s dollar reserves have been questioned for years. However, last year’s events, including Three Arrows Capital’s bankruptcy, Terra USD’s de-pegging, and FTX’s failure, affected all stablecoins.
“The interesting paradox here is that tether has become the industry’s most trusted stablecoin,” Ryder adds. “Tether’s haven status differs from bitcoin in that it provides a safe peg to $1, one of the only stablecoins that can claim that.” As a type of money “outside” the banking system, bitcoin is considered a safe refuge against monetary debasement. Bitcoin has risen 73% this year after reaching resistance at $31,000 last month.