Why is the premium of USDT so high? (USDT premium)
Why is the premium of USDT so high? Why is the premium of USDT so high?The marke
Why is the premium of USDT so high? Why is the premium of USDT so high?
The market value of USDT has exceeded that of Bitcoin, accounting for over 20% of the total Bitcoin supply. As Bitcoin prices continue to decline and more and more users enter the cryptocurrency market, Bitcoin has experienced a significant increase, reaching a historic high of $36,000 at one point. At the same time, due to the recent market crash, the quantity of stablecoins in the Ethereum network has also decreased.
So what factors contribute to the high premium of USDT? Let’s discuss this issue today. 1. What is the high price of USDT?
USDT has been on the rise in the past few days. Despite recent negative sentiment surrounding USDT, its actual trading volume has continued to grow. 2. Reason 1: Currently, there are many Bitcoin holders in the market who have not sold USDT or other digital assets. Although USDT has become the most popular and largest decentralized currency globally, it is still the most active ERC-20 token in the market. Therefore, if we compare it with mainstream digital currencies such as BTC and USDC, we will find that this situation is not very common because it is not suitable for use as a means of payment. 2. Why does USDT have a significant premium? USDT is fundamentally different from BTC in that USDT itself has a certain premium. This is because Bitcoin’s price usually has high volatility, similar to gold, and is often accompanied by extreme market fluctuations. On the other hand, USDT is the opposite. According to Coinmarketcap data, as of the time of writing, the 24-hour trading volume of BTC/USDT is approximately $9.16 billion, a decrease of about 25% compared to the spot price of BTC on exchanges. In the past few weeks, the price of USDT has dropped from a high of nearly $40 to around 10 cents. 3. Reason 2: Why does this premium exist? The reason why USDT is widely accepted is that its value is not influenced like fiat currencies, so its premium is very evident. For example, on December 18, 2019 (US time), the price of USDT was only $4.88; during the same period, the price of USDT was only 0.008 cents. (Note: USDT is a stablecoin issued by Circle based on blockchain technology.)
In addition, according to Cointelegraph, the price of USDT has rebounded since June this year. As of the time of writing, the circulating supply of USDT has reached approximately 715,000, which is about 10% of the current circulation.
USDT premium
According to reports, the USDT premium has exceeded BTC/USD. Currently, Bitcoin has risen by about 15% in the past 24 hours, reaching a level of about $22,000. Ethereum (ETH) and Ripple (XRP) have each fallen by 6%, 8%, and over 12%, respectively. Additionally, Tether has also experienced shortages as its token price is lower than the exchange rate at the time of issuance, indicating the presence of a large number of arbitrage traders in the market. Furthermore, the price of Bitcoin on Bitfinex has recently declined significantly, while BTC futures prices on Coinbase still maintain a considerable premium.
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