Last year saw a special trend in the inventory of new Tether (USDT) that has been put into circulation. This number has increased enormously with $ 5 billion in 2020. The stablecoin is once again taking a more dominant position in the Bitcoin market.
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Tether (USDT) in the Bitcoin market
One of the many questions from the Bitcoin community about this stablecoin is who actually buys all this Tether.
According to a new report from Sino Capital, the answer is quite simple: it's the Chinese investors. And they do not insist that they buy or have USDT, because the government prefers not to. Decrypt reports this research in a news release.
USDT has been widely criticized. An academic study showed that the use stablecoin would be Bitcoin do pumpen however 2017. This research received much criticism and supply has also invalidated .
In addition, there is a charge that only three-quarters of reserves have been held in the bank account. Critics claimed that the company only “prints” the stablecoin without having any real buyers, driving up the price of Bitcoin.
OTC trading
But there is one thing that is heavily influencing the release of this new Tether. According to the report, this is the massive group of Chinese buyers using the over-the-cointer (OTC) trading.
“Our main point is that the OTC is a huge market in China and it is much bigger than people think. And USDT is at the heart of this cash flow, ”said Matthew Graham. He is the CEO of Beijing-based Sino Global Capital.
In this 2020 calendar year alone, Tether has released $ 5 billion in new USDT to the market. Thus, the market capitalization equals $ 9 billion, which is 10 times higher than the runner-up in the stablecoins list.
The demand for much of this Tether is estimated to be from 100,000 Chinese private and institutional buyers. They have no access to other trading pairs on exchanges.
"USDT is a very popular way for Chinese investors to enter the market, with most exchanges offering a range of OTC options."
Semi-tolerant policy
The situation in China is confusing. The government recognizes Bitcoin as a virtual property (and doesn't prohibit it), but they are against exchanges. However, many of these exchanges have moved their servers to other jurisdictions. So they can still be reached by Chinese citizens who use VPN.
Since 2018, China has also denied its citizens access to foreign bitcoin exchanges. It has also banned banks from opening accounts to and from stock exchanges.
An anonymous OTC employee spoke to Decrypt about the report. He pointed out that trading Chinese Yuan (CNY) for Bitcoin is not technically illegal. However, anyone who does this will have their bank account locked or even closed. A trading pair from USDT to Bitcoin is not fully legal, but it is tolerated.
