On-chain data reveals that Tether (USDT) has seen the highest demand ever in 2019 in terms of transaction volume. However, 60% of these transactions come from China alone, according to data from Chainalysis. This number is nearly double the on-chain transactions from China in 2018 during the Bear market and is still on the rise.
Global and western exchanges losing traction
As the number of on-chain transactions involving Tether (USDT) rises for China, Western and global exchanges seem to be losing. For instance, global exchanges such as Binance and Bitfinex have dropped in the number of Tether on-chain transactions from 47% to just 31% this year, representing a drop of 34%. U.S based exchanges, on the other hand, have dropped from trading share of 44% in 2017 to less than 10% in 2018, representing a drop of over 77% in Tether on-chain trading. Considering the trend, this may have gone even lower in 2019.
Chinese exchanges received over $16 billion in Tether in 2018 alone and $10 billion worth of transactions have been recorded already within the first 5 months of 2019, indicating a significantly higher total for the year is in view. Tether on-chain transactions in and out of the U.S however only accounts for 3% of the volume recorded so far in 2019, indicating a reduction in the demand.
Fake volumes? Maybe not
One striking thing about the data and the investigation by Chainalysis is that there are no indications of fraudulent activities attached to the Tether volumes. A report by Diar says the movement of Tether is purely an indication of interest in the stablecoin across exchanges and the Bitwise report that 95% of exchanges report false volumes may be far from accurate. The report also indicates that there are no irregularities characterizing Chinese exchange volumes that are different from regulated U.S-regulated exchanges and so these movements are normal trading movements.