Reports & Analysis

Why hasn’t the new USDT entered the market in weeks? Is this digital currency weakening?


From the end of May (early June) we saw a relatively strange event in the market; The rapid growth of the Tetra market value stopped abruptly, just as the price of Bitcoin fell from its all-time high. Now that the price of Bitcoin is stuck in the range of $ 30,000 to $ 40,000, there are repeated conversations that seek to answer one of the oldest questions in the field: Has Teter stopped pumping the price of Bitcoin again?

However, experts and traders in the digital currency market believe that the cessation of the supply of more tetra actually indicates that Bitcoin, as the king of digital currencies, is facing challenges that threaten its dominance. Experts cite China’s restrictions on Chinese traders’ access to Tetra, the emergence of a rival called the USDC, and legal pressures on Tetra as reasons why the new Tetra has been discontinued.

to the the report Paolo Ardoino, chief technology officer at Tetra, acknowledged the decline in demand for Tetra, saying it was not unique to Tetra. He said about this:

Demand for tetra sometimes rises and sometimes falls, and in recent weeks we have seen low demand. Teter is not the only Stablecoin that has seen declining demand.

Tetra market value compared to bitcoin price
The market value of Tetra compared to the price of Bitcoin

Restrictions on China

China’s restrictions on both mining and trading have had a devastating effect on bitcoin prices. Bitcoin price peaked at $ 64,928 in April. Following the negative news from China, each bitcoin unit has now fallen by 52% to $ 31,000.

In addition to bitcoin, Tetra is one of the victims of China’s restrictions; Because Teter is very popular and used among Chinese users and traders. Because buying and selling digital currencies in yuan is prohibited in China, the Chinese used the Tetra as a tool to circumvent this restriction and criticized their digital currencies through platforms such as OTC desks.

Last month, Chinese police arrested more than 1,000 people on money laundering charges. According to police, the men used digital currencies to circumvent the law. Similar actions against people who traded at desks and outside exchanges are one of the reasons why the growth of Tetra in China has slowed down so much.

Annabelle Huang, senior executive at Amber Group Digital Asset Management, says:

Using digital currencies, cashing in or buying them has become extremely difficult in China. Many OTC trading desks have stopped trading.

With Bitcoin trying to break its $ 30,000 to $ 35,000 channel, there is no incentive to invest more in China’s digital currency market.

Rachel Lin, a former Matrixport senior executive, said in a statement:

The Tetra market in Asia is not mainly done through exchange offices, and despite the lower capital inflows into the market, the demand for Tetra is also lower.

The Hong Kong Lending Platform Babel recently announced that it would cut interest rates on Tetra deposits. The company cited low demand for this stable coin as its reason for the decision. However, the company did not provide a reason for the decline in demand.

China’s legal restrictions on money laundering activities do not appear to be over. The China Morning Post reported Wednesday that Hong Kong Customs had busted a money laundering gang that used digital currencies, especially Tetra. The gang laundered about $ 155 million, according to the report. This is the first time Hong Kong has enforced such restrictions.

Dan Burke, BitGo’s director of corporate sales in Asia and the Pacific, says:

Hong Kong News could put pressure on all dollar / tetra trading tables in Singapore and Hong Kong.

USDC growth

As Tetra’s growth slows, the day-to-day situation seems to be in the USDC’s favor. USDC is another stable coin that Circle is responsible for offering and publishing.

Shortly after Circle announced plans to expand the USDC to a maximum of 10 more Blockchainks, it was announced that the company was seeking a public offering of its shares through SPAC.

Theron, led by Justin Sun, is one of the Blockchain recently added to the USDC. According to the Circle website, one of the goals of this digital currency in the blockchain is to create the conditions for “growth in Asia” and other parts of the world.

Because the blockchain offers cheaper and faster transactions than the Ethereum, there are more tetris on theron than there are tetris on the Ethereum; According to experts, Asian traders prefer cheap and fast transactions. Based on this fact, it can be said that the entry of the USDC into the ChinaTron bloc will be largely tempting for Asian traders.

Justin Sun said:

I think the USDC in Asia has a chance to compete with Tetra in the stable coin market. I feel that the Asian stable coin market needs more diversity in terms of infrastructure at the moment, and Asian traders are looking for more options.

According to Lane, unlike Tetra, which relies heavily on channels outside of exchanges, the USDC can be easily purchased because of the incentive customer service provided by Circle in Asia. He added:

Working with USDC is very simple. As soon as you provide the required documents, a person will contact the number via email.

It may be too early to say whether the USDC‌ could break the dominance of the Asian stable coin market; The USDC, meanwhile, has been able to dominate decentralized finance or defa.

Almost half of the USDC supply is locked in smart contracts. According to Glassonood, only 20% of Tetra’s supply is locked in smart contracts.

Ryan Watkins, an analyst and researcher at Messari, said in a statement:

Tetra chart

USDC is increasingly used in intra-chain payments. However, Tetra is mostly used in intra-exchange transactions and as a margin in futures transactions. It should not be forgotten that these transactions have decreased as the market calmed down.

Vulnerability of Tetra and bear market

One of the problems that Tetra has been struggling with for a long time is its popularity in the digital currency community. Many people claim that Tetra, as the largest stable coin in the market, does not have enough support.

Noelle Acheson, Marketing Manager at Genesis Global Trading, says:

The market is full of negative emotions and traders are looking for a reason. It is a season of fear and uncertainty, and the vulnerabilities of Tetra are present in almost every debate.

Acheson says the market is thirsty to explain the reason for the “reluctance” of prices, and Tetra and the company behind them, with their support margins, are a great target.

For some time now, regulators and government agencies have been under the microscope of Tetra and other stable coins. Federal Reserve Chairman Jerome Powell spoke to the House Financial Services Committee last week about the digital currencies. According to documents released in May, about half of Tetra’s support comes from commercial paper. Powell said:

Commercial securities are short-term liabilities of companies and in most cases these securities are classified as investment categories, most of them are largely liquid and have no problems. But in times of market crisis [این اوراق] Disappears. This is exactly when people ask for their money. It is very simple: such economic activities are similar to bank deposits and money market capital and must be regulated in a similar way.

Some negative market sentiment and their integration with legal concerns have overshadowed the growth of Tetra / USDC in Bainance. Currently, this currency pair has the largest share in USDC currency instant transactions. In other words, traders are currently converting their tetra into USDC. It is possible that this action is due to their fear of devaluation. Or maybe they see more use in the USDC!

Hassan Basiri, Vice President of Arca Capital Management Company, said in a statement:

Some traders may borrow tetra and convert it to USDC. As you know, the USDC is priced at $ 1; As a result, when you borrow a Tetra and exchange it with the USDC, you can buy the Tetra for less than $ 1 if it does not have enough support.

Lynn believes that it should not be forgotten that many tokens traded in Bainance, which have a low market value, have only Tetra pairs, and this can also affect Tetra / USDC‌ pair transactions.

An example is the Oxy Infinity Token (AXS), which has been making a lot of noise in recent weeks. This token is only available in Binance with Tetra, BUSD and Binance coin currency pairs, while this digital currency does not have USDC trading currency pairs. BUSC and USDC‌ are another popular currency pair in Bainance. After Tetra / USDC, Bitcoin / USDC and Ether / USDC, this pair has the most trades in Bainance.

Basiri believes that if traders wear shorts, it is a response to the fear and uncertainty that exists in the market. However, he says there are no concerns about the Stables’ discussion. He added:

Tetra has no problem and has never had a problem.

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