Stablecoin Tether’s dominance for crypto trading pairs has surged over the past three years so much that it now accounts for almost three-quarters of all exchange pairs according to recent research.
Back in 2017, crypto trading pairs were primarily made in Bitcoin which is what partially boosted it on its way to an all-time high of $20,000. Prices for altcoins were suggested in satoshis before dollars but the rise of stablecoins changed all that.
Today, stablecoins dominate crypto trading, and Tether is the king of the crop on centralized exchanges.
Tether Taking 70% of CEX Trade Volume
According to research by The Block, and retweeted by Unfolded, Tether accounted for only about 5% of trade volume in 2017, with Bitcoin commanding 50% and fiat dollars taking around 40%.
Fast forward to 2020 and as much as 70% of the volume is denominated in USDT, with another 4% in other stablecoins, while only about 15% comes from Bitcoin pairs;
In Q1 2017, only about 5% of the volume was denominated in Tether while BTC pairs were nearly 50% of volume and USD pairs about 40%
— unfolded. (@cryptounfolded) October 12, 2020
According to the Tether Transparency Report the total supply of USDT is just under $16 billion. Of that total, almost 65% of it is based on the Ethereum ERC-20 standard which has become the industry standard for stablecoins and all things DeFi. Tether also launched on the institutional Solana blockchain last month and the Plasma L2 OMG Network in June.
FlipsideCrypto also reports the 30-day asset flow of USDT showing that whales hold over 2 billion of them while the top exchanges hold around 2.5 billion, and 400 million is in DeFi.
The original findings were posted by Larry Cermak who stated;
“Now that BitMEX is losing market share, most of collateral in derivatives is gonna be in USDT too.”
He added that it is important to realize how ‘extremely sticky pair denomination and collateral denomination’ is, and why Tether’s dominance will not decrease for trading for years. Regulatory intervention may change that, he added before proclaiming;
“Tether is king for trading and will continue to be so,”
No More Barts After BitMEX Demise
Regarding BitMEX, much of the wider crypto community has reacted positively to the news that its founders have been charged and the exchange is leaking liquidity.
Some have suggested it could be the end of the ‘Bart Simpson’ chart pattern which is caused by a lot of highly leveraged positions being liquidated at once on exchanges such as BitMEX which allow trading with up to 100x leverage.
More realistic price discovery for Bitcoin has been welcomed all round.