Tether is now the third biggest cryptocurrency by market capitalization. On May 25, it overtook XRP, reaching a market cap of around $8.7 billion. Now it is expected that USDT can become the number two crypto instead of Ethereum.
A report from Bloomberg that provides a crypto market outlook for June we wrote about yesterday also mentioned that it expects Tether (USDT) to surpass Ethereum (ETH) in market capitalization and take over the second place.
The report notes the growth of Tether’s market capitalization as one of the main drivers for the appreciation of Bitcoin (BTC). The thing is that fastly rising market capitalization of stablecoins is showing that currencies are going digital and support the Bitcoin price.
COVID-19 is accelerating the shift away from paper money and stimulating plenty of quantitative easing, which is helping independent stores-off value such as gold and Bitcoin.
The report also says that the rising interest in crypto assets tracking a stable currency is an enduring trend and support for the Bitcoin price.
“Bitcoin is the benchmark crypto asset and is increasingly becoming a digital version of gold. Akin to the metal, the first-born crypto is independent and no one’s liability.”
Lately, Tether managed to surpass XRP at the number three cryptocurrency by market cap. Bloomberg says that it will not stop there but will march straight pass Ether to the second spot.
The report also stresses that Ether lives in Bitcoin’s shadow and has no resilience of its own:
“We see little upside in the ETH price absent a rising tide from Bitcoin. The pre-eminent crypto is breaking away from the pack in terms of adoption and is supported by almost-ideal macroeconomic conditions for stores-of-value amid quantitative easing.”
Having Tether as 2nd Biggest Crypto Instead of Ethereum May Not Be That Great
In spite of the massive U.S. stimulus package, the dollar is still rising in comparison with other major currencies. As such, stablecoins like Tether that provide access to the dollar are rising as well. The report reads:
“We see little upside in the ETH price absent a rising tide from Bitcoin. The pre-eminent crypto is breaking away from the pack in terms of adoption and is supported by almost-ideal macroeconomic conditions for stores-of-value amid quantitative easing. Tether is in a similar position.”
The thing is because there are so many traders depend on Tether as an on/off-ramp and as a hedge, its market cap is likely to grow to the extent that more people trade crypto. However, having Tether as the second biggest cryptocurrency may not be so great for the stability of the crypto ecosystem. Because with Tether and its parent company iFinex embroiled in a number of legal battles, its disappearance or collapse could have disastrous consequences for crypto.
Read crypto news daily on Coinspeaker.