Why can't you buy USDT at the normal price?
Produced | Odaily (ID: o-daily)
Produced | Odaily (ID: o-daily)
When the cryptocurrency market experienced a "black week", stablecoins as deposits and withdrawals became the focus of the topic.
On March 12, BTC fell by more than 40% within a day. On March 13, Bitcoin continued to bottom out and fell to $3,800.
The plunge of Bitcoin has led to the spread of market panic. Some investors are eager to sell their cryptocurrencies and exchange them for USDT as a hedge, while other off-market investors are eager to enter the market to buy bottoms. Under the collision of these two capital forces, the USDT premium once As high as 14.29%, a record high. On March 12, in the Huobi OTC trading area, the USDT off-site quotation once exceeded 8 yuan.
In the past week, BTC bounced back above 6,000 USDT after several shocks. Tether has issued a total of 173 million USDT in 7 days, and USDT is still at a premium. 1 USD = 7.0517 RMB).
On the one hand, concerns about the USDT thunderstorm still spread in the industry, on the other hand, the extreme market has also brought short-term rapid growth to the stablecoin market.
According to data from DAppTotal, the total stablecoin market is currently as high as 6.75 billion US dollars, an increase of 11.46% over the past 7 days. A total of 5 stablecoins ranked among the top 50 in CoinMarketCap market capitalization, USDT market capitalization rushed into the top five; USDC market capitalization ranking rose from 30th to 18th, surpassing the market capitalization of ETC; BUSD even jumped from 243rd to 36th, with a market capitalization increase of over 900% .
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USDT maintains a high premium or is related to the shipment of large players
Despite the continuous issuance, stablecoins are still at a premium.
According to Whale Alert monitoring data, in the past 7 days, Tether has issued a total of 173 million USDT (including authorized but not issued).
According to Huobi OTC market, as of press time, Huobi OTC’s lowest price for buying USDT is 7.25 yuan, and the premium has remained between 2% and 3% in the past two days.
Many people have expressed their views on the USDT premium.
Yang Haipo, CEO of ViaBTC mining pool, said on Weibo that it was caused by too many people selling USDT. USDT, reducing the high premium caused by the number of USDT circulating in the market.”
From the media, Grandpa Bi believes that the reason why USDT has maintained a high premium is related to the previous large-scale shipments: the reason for the shipment is that the current mainstream voice is that large-scale investors are worried about the outbreak of the financial crisis, so they choose to sell BTC to obtain cash to resist risks. In the BTC trading market, the USDT transaction volume is the largest. After the shipment, the big players hoarded a large amount of USDT. Since it is to prevent liquidity risks, these big players can choose to hold USDT first for emergencies, or they can exchange it for fiat currency.
There are two main exchange channels. One is to return to Tether to exchange for US dollars, which is suitable for large orders and takes time; Safe, such a large amount of funds will not choose to be exchanged into legal currency at one time). The final result is that a large amount of USDT is occupied in the market, resulting in an imbalance between supply and demand in the market.
Li Lianxuan, a senior researcher at OK Research, analyzed to Odaily that the reason why the USDT premium has not been eliminated is that the market panic is still serious and the market liquidity is still insufficient. People are looking for the safer and most liquid asset-"dollar" .
Most stablecoins are pegged to the U.S. dollar, and the status of stablecoins in the digital currency market is actually equivalent to that of the U.S. dollar. Many people simply attribute the lack of liquidity to the lack of monetary assets.
In fact, insufficient liquidity is also related to people's risk appetite and expected returns. This is why after the Federal Reserve has carried out the quantitative easing policy for nearly ten years, the current round of crisis broke out, and the reason why the world quickly changed from excess liquidity to insufficient liquidity.
Although U.S. stocks have experienced circuit breakers four times this month, the U.S. dollar remains strong as a safe-haven currency. Since March 10, stimulated by market panic, the U.S. dollar index has been soaring. has been on the rise. On March 19, USD/CNY touched the 7.07 mark, and was last at 7.07. The increase in the exchange rate of the US dollar against the renminbi also makes the USDT denominated in yuan present a positive "premium" status.
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Plunge spurs stablecoin market growth
Cryptocurrencies have lost tens of billions of dollars in the market rout, with bitcoin dropping as much as $3,600 in one day, its biggest one-day drop since 2013.
The plunge has also fueled demand for stablecoins. When the market plummeted, the total stablecoin market grew rapidly.
While the market value of other digital currencies continues to shrink, the ranking of stablecoins continues to rise. As of press time, there are 5 stablecoins among the top 50 in the CoinMarketCap market capitalization rankings. Including USDT (ranked 4th by market cap), USDC (ranked 18th by market cap), PAX (ranked 32nd by market cap), BUSD (ranked 36th by market cap) and TUSD (ranked 39th by market cap).
According to data from DAppTotal, the total stablecoin market is currently as high as 6.97 billion US dollars, an increase of 13.24% over the past 7 days. Among them, USDT holds the leading position in the stablecoin market with a market share of 79.95%, USDC ranks second with a market share of 9.22%, PAX and BUSD rank third and fourth with a market share of 3.32% and 2.28%, respectively.
The market share of stablecoins has also changed slightly, with USDC and BUSD seeing substantial increases.
The total value of the emerging stable currency market has also increased significantly, an increase of 24.48% over the past 7 days, which is about twice the growth rate of the entire stable currency market in the past 7 days. USDC occupies the leading position in the emerging stable currency market with a share of 45.81%. PAX and BUSD respectively Market shares of 16.48% and 11.35% occupy the second and third positions.
Let’s take a look at the performance of individual stablecoins:
USDT：
The "King of Stablecoins" USDT has always maintained a stable dominance, with a current market value of 4.656 billion US dollars. Since February 15th, USDT's ranking has maintained an upward trend.
Tether has also been broadening its USDT distribution network. Today, Tether announced the launch of its token on the BCH network via the Simple Ledger Protocol (SLP), Bitcoin.com reported. As of now, most tokens run on Ethereum, and Tether already supports the issuance of USDT on networks including Algorand, EOS, Liquid Network, Omni, and Tron.
From the perspective of chip distribution, currently USDT is mainly distributed in the three major exchanges of Huobi, Binance and Bitfinex, accounting for 61.07%, 31.58%, and 7.35% respectively, and the chips are relatively concentrated.
At present, the main chips of USDT are concentrated on Huobi, so USDT has the smallest premium on Huobi exchange. As of press time, USDT is quoted at 7.25 yuan on Huobi OTC, and 7.26 yuan on OK, Binance and OTC.
USDC：
The USDC issued by Circle has been issued significantly in the past week. According to DAppTotal statistics, since the market crash on March 12, a total of 186 million USDC has been issued, and the USDC market value ranking has risen from 30th to 17th, reaching 629 million Dollar.
In addition, there is another good news that has attracted USDC's attention recently, that is, MakerDAO, the largest DeFi lending platform, announced on March 17 that it added USDC as a new mortgage asset to reduce DAI's liquidity risk. Users can use USDC to open Maker Vault to generate DAI, which is the third collateral approved by Maker Governance after ETH and BAT. This is also one of the reasons for the additional issuance of USDC in the past week.
With the drainage of MakerDAO, the scale of additional issuance of USDC in the future may be further expanded, which in turn will drive the growth of market value and market share.
However, judging from the distribution of its chips, the distribution of USDC is highly concentrated in Binance, with a high share of 84.59%, Huobi and Bitfinex share 11.91% and 3.5% respectively. It is not a good thing for the market and investors that the chips are highly concentrated in a certain exchange, because once the chips are too concentrated, the currency price is in danger of being manipulated, and stable coins are no exception.
Regarding the improvement of USDC's market share and market value ranking, Circle CEO Jeremy Allaire excitedly expressed his feelings on Twitter on March 14, "In the past few days, we have seen the market demand for USDC surge, and we have seen stablecoins in the encrypted world. It is found that the market urgently needs stable coins with high liquidity. Although we are not willing to see the market plummet, we still feel very happy when we see the safe-haven effect of stable coins in the market crash. Glad."
PAX：
The market capitalization of the third-largest stablecoin, Paxos Standard (PAX), has grown nearly 5% from $208 million to $218 million in nearly a month, helped by a recent infusion of 7.6 million tokens from PAX reserves.
Despite a relatively small increase in market capitalization, PAX has risen from No. 42 to currently rank as the 32nd largest crypto asset by market capitalization.
Judging from the distribution of its chips, the distribution of PAX in Binance is relatively concentrated, with a share of 64.97%, while that of Huobi and Bitfinex are 34.91% and 0.13%, respectively.
BUSD：
Binance USD (BUSD), which was launched by Binance and Paxos half a year ago, has seen an extremely significant increase in market share in the past month. From February 16 to March 15, BUSD's ranking jumped from 243rd to 36th, while its total market capitalization increased by more than 900% from $17.5 million to today's $159 million.
TUSD：
Over the past month, TrueUSD (TUSD) has also managed to break into the top 50 while other cryptocurrencies have lost market capitalization — rising from 60th to the current 39th position.
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Liquidity Issues Become Stablecoin Stress Tests
Although this market slump has brought opportunities for stablecoins, the issue of stablecoin liquidity drying up under the market slump is also worth pondering.
In extreme market conditions, some people need to sell their digital assets out of risk avoidance, some people want to take advantage of this opportunity to buy bottoms, some speculate in contracts and urgently need stablecoins to supplement margins, and some people need to use stablecoins to repay loans on DeFi platforms in time , otherwise, a large number of defaulted loans on DeFi agreements will be executed and liquidated... All of the above will lead to a surge in people's demand for stablecoins.
On the day of the market crash on March 12, due to the sharp increase in investors' demand for USDT, the exchange once caused freezes and downtime, and some users were even unable to buy coins or withdraw cash.
Moreover, on March 12, the stablecoin liquidity of almost all decentralized exchanges was exhausted, which once led to a 6% premium of DAI/USDT, which has now fallen back to 3%. Many people joked that it has been a long time since the K-line of a stablecoin is so unstable.
In order to alleviate the problem of DAI liquidity depletion, MakerDAO officially implemented two solutions: 0 interest rate and expanding USDC as MakerDAO's collateral, in order to promote depositors to release liquidity through 0 interest rate, and expand collateral to increase liquidity for borrowers sex.
On March 16, in response to the incident of "DAI deposit interest rate reduced to zero", Pan Chao, head of the MakerDAO China community, said, "DAI is about to enter the era of zero interest rate. The previous lending will not be affected, and the interest will be calculated in stages. Special period , the deposit interest rate drops to 0 will release liquidity to the market. In the future, there will be a policy similar to QE (quantitative easing), but instead of releasing water, there will be more new collateral besides ETH, among which the stable currency USDC is the first choice. "
On March 17, after an administrative vote, MKR holders accepted the addition of the stablecoin USDC as a new collateral asset, and users can now use USDC to open Maker Vault to generate DAI, which is the third collateral approved by Maker Governance after ETH and BAT Taste.
Immediately, the expansion of USDC as MakerDAO's new mortgage asset aroused discussions in the MakerDAO community. Some people thought that decentralized DAI would eventually need centralized USDC to activate liquidity. Centralization has no liquidity, it doesn’t matter whether it is centralized or decentralized, as long as it is practical.”
Aeno, a member of the MKR community, believes that expanding USDC as a new mortgage asset sounds like a temporary solution to the DAI liquidity problem, but the USDC proposal itself has new economic risks and should be carefully considered. The community can adopt this solution, but USDC should be mixed with the decentralized system. Considering the decentralized nature of MakerDAO, Aeno stated that he does not want to see DAI and USDC mixed with each other.
Yang Mindao, founder of dForce & Blockpower, believes, “The first step for DAI should be to adjust the mortgage rate to 120%. The effect of this policy is better than the introduction of USDC. The key is that this system is self-consistent, rather than the introduction of USDC. measures of self-exclusion.”
The reduction of the mortgage rate has also expressed the aspirations of many DeFi users. For a long time, the excess mortgage rate of DeFi has indeed restricted many users from outside the circle. Lowering the mortgage rate is easier to operate than introducing USDC, and it may also attract new users.
It is often said in the traditional financial circle that "cash is king during a financial crisis". When the cryptocurrency market suffers a plunge, the stable currency anchored to the US dollar will naturally become the "cash" in the encrypted world, with a significant hedging effect.
If the price of mainstream digital currencies represented by BTC continues to fall, there will be more demand and tests for stablecoins.
