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Tether mints another $1 billion USDT this week; Is a market pump ahead?

Tether mints another $1 billion USDT this week; Is a market pump ahead

Tether, the world’s largest stablecoin issuer, has minted an additional 1 billion USDT tokens on the Ethereum (ETH) blockchain, fueling speculation about a potential market surge. 

This development coincides with the crypto community’s anticipation of the U.S. Securities and Exchange Commission’s (SEC) decision on a spot Ethereum exchange-traded funds (ETF), expected later this week.

Tether’s CEO, Paolo Ardoino, clarified on X (formerly Twitter) that this issuance was for “inventory replenishment” and was an “authorized but not issued transaction.”

This means the tokens will be used as inventory for future issuance requests and chain swaps, but are not yet in circulation. This move is viewed by market analysts as a strategic preparation for a potential market rally fueled by the expected approval of an ETH ETF.

Ivan Sherbakov, CEO of Cryptorobotics, speculated that  this influx of liquidity will be used to pump the market ahead of ETF news.

Historically, an increase in USDT supply has been linked with broader upward trends in the crypto market, leading to increased trading volumes and a more vibrant digital asset environment.

Tether’s market impact

As of May 22, Tether’s Transparency page shows $87.8 million worth of these USDT tokens on Ethereum. Tether’s market cap has grown significantly over the past year, exceeding $111 billion and accounting for roughly 70% of the stablecoin market. 

This growth has been driven by various factors, including the successful launch of spot Bitcoin ETFs in the U.S. and Tether’s diversification into areas like Bitcoin mining.

Concerns and considerations

Despite the positive market implications, some analysts have expressed concerns about Tether’s lack of transparency. Deutsche Bank analysts have highlighted potential risks associated with Tether’s significant market dominance.

With the total stablecoin market capitalization exceeding $160.9 billion, Tether holds a significant share. 

These transparency issues and market dominance continue to be debated among analysts and investors, even as Tether’s actions could trigger significant market movements if the ETF is approved.

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