Tether May Become Bitcoin’s Top Competitor by Market Cap in 2021: Analyst
The demand for stablecoins is growing by leaps and bounds, demonstrating reaching new emission highs. Can Tether catch up with Bitcoin in the market cap?
Stablecoin capitalization skyrocketed
The stablecoins have shown explosive growth in terms of market capitalization, doubling this figure in the past few months. Analysts associate the increase in demand for the emission of stablecoins with the development of the cryptocurrency derivatives market, the rise of the Defi sector, and the desire of traders to preserve their assets during times of stress in the market.
Investors also see stablecoins as a lifeline from volatility, which manifests itself quite dynamically and unpredictably in the cryptocurrency market. Pegging to fiat currencies allows achieving price stabilization and minimizing the risks of asset loss, unlike Bitcoin and altcoins. A good example is 2018 when many traders suffered colossal losses due to the fall in the price of Bitcoin from $20,000 to $3,500 thousand in early 2018.
Will Tether overtake Ethereum in capitalization?
Tether (USDT) continues to be the leader in market capitalization among stablecoins. Despite its meteoric rise, the coin has a mixed record in the crypto community. Tether’s reputation has been tarnished by the scandal associated with the crypto platform Bitfinex, which is accused of market manipulation by issuing USDT. Stones also flew in the direction of Tether after the publication of a study by Professor John Griffin on the impact of the coin on the Bitcoin crash in 2018.
Nevertheless, Tether is steadily increasing its weight in the crypto market. According to a recent report, the coin’s market capitalization surged to $ 16 billion, up 300% in 12 months. According to Mike McGlone, senior strategist at Bloomberg, if this growth trend continues, Tether could overtake Ethereum in terms of market capitalization as early as 2021.
Mike McGlone is convinced that the macroeconomic situation, artificial stimulation of the US economy, the demand for digital assets can further fuel interest in Tether. The strategist in his report focuses on the fact that in 2020 Tether was more productive in terms of market indicators than Bitcoin. He noted:
Despite the high-profile statements of the strategist Bloomberg, representatives of Tether Limited, have a different vision of the future of Tether. In particular, Paolo Ardoino assures that Tether is not a competitor for Ethereum, much less aspires to replace Bitcoin.