Tether price prediction: USDT stablecoin assets drop
Stablecoins should be stable, but Tether scared people by briefly dropping to 95 cents earlier this year.
- Tether price prediction
- From the Tether whitepaper
- How Tether operates in the wider crypto market
- Tether reserves
- Market volume roller-coaster ride
- Forget price predictions, look at supply
- Beyond Tether price predictions: Company woes
Tether’s USDT token has retained its parity with the US dollar after its brief dip to 95 cents early in May 2022, despite a DDOS attack by hackers – but the stablecoin’s system does not have as many assets as it once did.
A report from auditing firm BDO found that Tether had assets worth assets totaling at least $66.4bn as of 30 June, down 20% from the $82.4bn it had in March.
In a statement, Tether CTO Paolo Ardoino said: “The utility of Tether continues to be supported by the transparency of its reserves and has been a leading source of stability allowing us to build a tool for the global economy. Our commitment to transparency and the community is a long-standing pillar in the underlying ethos of the company and aligns with our responsibility as a market leader.
“We have once again demonstrated that commitment by aligning with BDO, one of the world’s top accounting firms. We look forward to continuing down this path and are dedicated to setting a market standard to which our competitors and future stablecoins can look to for guidance.”
The news comes after a tumultuous few months for the stablecoin, which saw it briefly drop to a low of $0.95 and face the threat of a hack.
Ardoino confirmed that the system had survived an attack on 18 June, tweeting: “This morning @Tether_to received a ransom request to avoid mass DDOSes. They tried already once. On a normal day we have around 2k reqs/5min. The attack brought us to 8M reqs/5min.”
He added: “Attack is now mitigated. AS-CHOOPA is the main ASN identified by Cloudflare.”
The attack saw the stablecoin, which had been trading at around $0.999, fall to $0.9985 on the day of the attack. By the morning of 20 June, it was worth $0.9987.
Tether’s USDT token is designed to be pegged to the US dollar, meaning it is supposed to maintain a constant value of $1. That said, it has not had true parity with the dollar – despite the organisation behind it assuring the coin’s holders that they could still redeem their USDT for $1 – since 11 May.
Given that stablecoins are, by definition, meant to be stable, Tether, the world’s third-largest cryptocurrency, frightened everybody on Thursday 12 May with a sudden fall to 95 cents. The collapse came after another dollar-pegged stablecoin, TerraUSD, had crashed by more than 99% the previous day.
At around 06:30 BST (UTC+1) on 12 May, Tether dropped below 99 cents, falling to a low of £0.9508 within two hours.
The coin had climbed back to $0.9867 within an hour and was at $0.9953 by 16:00 BST (UTC+1), after witnessing a 24-hour trading volume of more than $173bn.
By the following morning, it was worth $0.998 as it made its way back towards full parity with the US dollar and regained its peg. On the afternoon of 13 May it was worth $0.999, achingly close to matching the dollar. While it had not reached full parity by 25 May, it still remained around that level, effectively pegged before finally matching $1 on 18 July – the first time it had reached that level in more than three months.
However, there were other concerns surrounding USDT, as its market cap shrank from around $83bn on 6 May to $73.2bn on 23 May after it was reported by The Guardian that $10bn worth of the coin had been withdrawn since the start of the crash.
On 26 May, its market cap slipped to slightly below $73.2bn, after news that, since the depegging of Tether, the number of wallets with $1m or more in rival stablecoin USDC had surpassed the number of wallets with $1m or in USDT. However, following the announcement that Tether had launched a new stablecoin – MXNT, linked to the Mexican peso – the coin resettled back to $73.2bn.
By 14 June 2022, as crypto stayed in a slump, the market cap was down to $71.52bn but, by 19 August, the coin’s market cap was down to $67.55bn. Nevertheless, it was still the largest stablecoin and the third largest crypto overall.
The initial fall in May appeared to prompt Tether to announce it was performing a “chain swap”, moving across blockchains in a bid to repeg the stablecoin.
Also on 12 May 2022, Ardoino reiterated that Tether would continue to honour one USDT for one dollar, tweeting:
Tether price prediction
So is it still possible, after all that excitement, to make a Tether price prediction?
Theoretically, the price of USDT should never shift. Every unit in existence is fully backed by traditional currency that is held in reserve. The stablecoin has almost consistently managed to rank as the world’s third-largest cryptocurrency, behind Bitcoin and Ether. It is also the undisputed market leader when it comes to stablecoins, and is streets ahead of rivals such as Gemini Dollar or DAI.
In 2021 we saw the number of people investing in the coin, and Tether’s overall market cap, explode. The size of Tether more than trebled from that point, surging from $21bn on 1 January 2021 to more than $71bn by 14 June 2022.
The sudden dip of 12 May was a rare wobble for the coin. On 20 January, after news of a potential Russian ban on cryptocurrencies, Tether was the only coin that withstood a market “bloodbath” that saw market leaders Bitcoin, Ether and Solana lose billions in value. The next day, the launch of Tether’s new streamlined, mobile-compatible website saw USDT’s trading volume more than double, while the rest of the market continued to suffer.
On 24 February, Russia started its invasion of Ukraine. The Russian central bank doubled its key interest rates on the Monday, from 9.5% to 20%, as an immediate countermeasure against the rising inflation of its fiat currency. As the dollar soared, Tether witnessed a spike of more than 30% over the course of five days against the Russian rouble.
From the Tether whitepaper
The blockchain’s whitepaper, Tether: Fiat currencies on the Bitcoin blockchain, states: “Common explanations for the current limited mainstream use of cryptocurrencies include volatile price swings, inadequate mass-market understanding of the technology and insufficient ease of use for non-technical users.
“Tether is based on the Bitcoin blockchain, the most secure and well-tested blockchain and public ledger in existence. Tethers are fully reserved in a one-to-one ratio, completely independent of market forces, pricing or liquidity constraints.”
How Tether operates in the wider crypto market
So, what is the Tether price prediction for 2022? And how is the Tether prediction shaping up for 2025, 2030 and beyond? Well, assuming that it continues to remain popular among crypto investors, it is reasonable to say that the USDT price will still be $1.
We do need to ask how a coin whose value should not go up too much has increased its market cap over the past year. Well, USDT can offer a safe haven whenever the markets turn bearish, ensuring that crypto investors can exit their Bitcoin positions without having to convert their capital back into fiat.
Supporters also believe that Tether can have a powerful role when it comes to the remittances market, enabling dollars to be sent worldwide without punishing fees. Tether also contributes to liquidity across the crypto markets and plays a crucial role in the blossoming decentralised finance (DeFi) sector.
In addition, with the overall cryptocurrency market starting to rebound since recent crashes, more people are making use of Tether as a way to trade their existing crypto assets for higher-priced coins.
Tether has also likely been helped to grow its market cap by the issuing of an attestation report, telling current and potential investors what was in the crypto’s reserves, as well as an explanation of the ratings and maturity of Tether’s certificates of deposit (CD) and commercial paper (CP).
As of the paper’s release on 30 July 2021, just under half the crypto’s reserves were in CP and CD, with around 93% rated A-2 and above and 1.5% below A-3. This news will have soothed the minds of traders who may have been concerned about the safety of the growing stablecoin.
Tether’s market cap on 1 January 2021 was around $21bn. Then, in keeping with the overall growth of the cryptocurrency market at the start of last year, it grew and grew, reaching $25bn on 26 January and $30bn on 10 February. One of the key points came on 3 April 2021, when it reached $42bn.
That meant it had doubled its market cap in the space of a little over three months. The figure continued rising, hitting $50bn by the end of the month. Even the great crypto day crash of 19 May 2021 barely hurt Tether. Its market cap went down from $58.4bn to $58.1bn from 19 May to 20 May, but it was soon back up, breaking through $60bn on 25 May.
While Tether took a break from minting new coins over June and July 2021, the stablecoin’s cap barely moved during these months.
Market volume roller-coaster ride
Market volume went on a roller-coaster ride over the summer of 2021. On 25 July 2021, trading volume was $45.9bn, but the following day it more than doubled to $92.4bn. On 27 July, it was back down to $67.9bn and was below $50bn on 29 July before shooting back up to $58bn on 30 July and $67.3bn on 5 August. There was yet more growth and Tether became the most-traded crypto in January 2022.
On 28 February 2022, the market cap hovered around the $79.6bn mark, while on 6 May, it stood at a little over $83bn. In the 24 hours to 14:15 BST (UTC+1) that day, $98.4bn worth of Tether was traded, making it the most traded crypto. This news came not long after the announcement that Tether was planning to reduce the amount of commercial debt in its reserves.
Even during the crisis of May 2022, there was still activity, with the 24 hours to 09:50 BST (UTC+1) on 12 May seeing almost $185bn traded, with a market cap of a little over $81bn. Six hours later, at 15:50 BST (UTC+1), there had been almost $170bn traded, with a market cap of about $82.3bn.
By 09:15 BST (UTC+1) on 13 May, once the coin had regained its peg, there had been more than $112bn Tether traded in the previous 24 hours and it had a market cap of a little below $80bn. At 15.25 BST (UTC+1), more than $103bn had been traded in the previous 24 hours and USDT enjoyed a market cap of around $78.7bn.
At around 09:45 BST (UTC+1) on 16 May, there was a 24-hour volume of $59bn, with a market cap of a little over $75.6bn. By about 08:50 BST (UTC+1) on 17 May 2022, 62,727,186,644 USDT had been traded in the previous 24 hours, and it had a market cap of about $75.6bn. By 09:00 BST (UTC+1) the following day, its 24-hour volume was $55bn and it had a market cap of $74.1bn.
In terms of market cap, the needle had barely moved by 08:00 BST (UTC+1) on 19 May, and the market volume had risen to $58.8bn. A little over 24 hours later, at around 08:30 BST (UTC+1), its market cap remained at $74.1bn, but the 24-hour volume had gone up slightly to $59.7bn. By 23 May, the market cap was down to $73.2bn, with a 24-hour volume at 09:00 BST (UTC+1) of $47.03bn. It was the largest stablecoin and the third-largest crypto overall.
By 08:45 BST (UTC+1) on 24 May 2022, the market cap was roughly the same, but the volume had gone up to around $57.4bn. The market cap was basically static as of 08:35 BST (UTC+1) on 25 May, but the volume was down to about $54.3bn. By 08:30 BST (UTC+1) on 26 May, the market cap had dipped to slightly below $73.2bn, and the volume had fallen further to $50.5bn. By 08:45 BST (UTC+1) on 27 May, though, the market cap was back to $73.2bn and, crucially, the volume had soared by more than 50% to just under $79.68bn.
On 13 June 2022, however, the market volume had shown signs of strength in a weak market, with the day’s 24-hour volume breaking $100bn and standing at $107.41bn. What was especially notable about this was that the previous day, just over $59bn worth of USDT had been traded. By 15:10 BST (UTC+1) on 14 June, the 24-hour volume stood at a little under $99bn.
On 18 June, the day of the DDOS attack, $61bn of USDT was traded and, by about 09:30 BST on 20 June, the 24-hour volume was about $57.2bn. Going forward a little over two months, and it enjoyed a volume of about $63.8bn in the 24 hours to 15:20 BST that day.
While the volume has fallen overall, this could easily be explained by a growing wariness regarding crypto in general, in the wake of recent events, and Tether is still redeeming one USDT for $1. We shall have to see whether the volume can continue to rise.
These figures came in the wake of the news that, in the three months to 31 March 2022, Tether Holdings had reduced the amount of commercial paper (CP) in its reserves by about 17%, from $24.2bn to $20.1bn. At the same time, the amount of money market funds and US Treasury Bills had risen by roughly 13% from $34.5bn to $39.2bn.
In a statement on 19 May, Ardoino said that the amount of CP in the reserves had dropped by a further 20% since 1 April, adding: “Tether has maintained its stability through multiple black swan events and highly volatile market conditions and, even in its darkest days, Tether has never once failed to honour a redemption request from any of its verified customers.
“This latest attestation further highlights that Tether is fully backed and that the composition of its reserves is strong, conservative and liquid. As promised, it demonstrates a commitment by the company to reduce its commercial paper investments and in doing so, led to a rise in its holdings in US Treasury bills.”
The CTO's comments were borne out by the quarterly report which was issued on 19 August.
Tether is a popular coin that is used a lot in trading. We can also see that as it becomes more popular its market cap grows. Nevertheless, if you want some fireworks in your Tether price predictions, you are probably not going to get them. If you invested $700 in USDT today, it will almost certainly be worth $700 in the years to come.
USDT’s price can fluctuate on occasion but, more often than not – and despite the events of 12 May 2022 – these swings are by fractions of a cent. Generally speaking, USDT manages to serve as an effective peg to the greenback, something that algorithmic stablecoins often struggle to achieve, as we have recently seen.
Whether the recent drop to $0.95 is a blip is something we shall have to keep an eye on, although it does appear to be moving closer and closer to the dollar parity that it needs to be truly effective.
Forget price predictions, look at supply
Tether’s market cap has exploded in recent months, but governments around the world are starting to explore plans to launch their own central bank digital currencies (CBDCs), with China considerably ahead of the pack in piloting its digital yuan (eCNY).
China tested the digital currency at the Winter Olympics in Beijing. In the Olympic Village, athletes and visitors were able to make purchases with cash, a Visa card or the digital yuan.
The US has confirmed that it intends to develop a digital dollar in the coming years, but does not appear to be in a rush. Would an official alternative eat into Tether’s market share?
Beyond Tether price predictions: Company woes
In recent months, there have been some developments that could have undercut confidence in USDT’s price. One was a long-running legal dispute between Tether, its parent company Bitfinex, and the New York State attorney general.
This came after allegations that USDT was not fully backed by cash reserves, and that Bitfinex took a loan from the stablecoin issuer to plug an $850m gap in its finances that was triggered by the collapse of a payment processor.
Bitfinex and Tether were subsequently ordered to pay damages of $18.5m, and agreed to submit periodic updates on the state of their reserves every three months for the next two years. Both companies were also prohibited from operating in New York.
At the time, Tether said in a statement:
“Tether and Bitfinex are pleased to have reached a settlement of legal proceedings with the New York Attorney General’s Office. Under the terms of the settlement, we admit no wrongdoing. The settlement amount we have agreed to pay to the Attorney General’s Office should be viewed as a measure of our desire to put this matter behind us and focus on our business.”
The legal drama did not end up affecting the latest Tether price prediction, which firmly remains at – yes, you guessed it – $1.
Further woes came on 15 October 2021 when the Commodity Futures Trading Commission in the United States fined Tether $41m for claiming its tokens were fully backed by fiat currencies. Bitfinex was additionally fined $1.5m.
Meanwhile, earlier in the year, Tether was in the news at the start of March after the crypto company announced on Twitter that it had been ordered to pay a ransom of 500 BTC, or else “sensitive documents” would be released. At the time of the demand, this payment would have been worth $27.5m.
Despite an outside chance that this could affect Tether (USDT) price predictions, the company stood firm and said that it was refusing to bow to the demands. Tether wrote:
“It is unclear whether this is a basic extortion scheme like those directed at other crypto companies, or people looking to undermine Tether and the crypto community as a whole. Either way, those seeking to harm Tether are getting increasingly desperate.”
There have been some outlandish Tether price predictions made elsewhere that suggest the crypto could be worth way over a dollar in the 12 months to come, driven by demand from institutional investors.
But the chances of such a USDT price prediction coming true are extremely slim, and although rapid growth might seem like a good thing, it could be disastrous for an asset that has built its reputation on dependably mirroring the value of $1.
It will be interesting to see whether Tether’s market cap continues to grow and whether a Tether price prediction for 2025 or other years will remain consistent.
Is Tether a good investment?
Potentially. Because it’s a stablecoin, it should keep to a value of $1, give or take a fraction of a cent. That’s the point of it – it isn’t meant to make or lose money in and of itself, but rather to be a stable store of value. This is why a USDT price prediction tends to be a fairly undramatic affair compared with other cryptocurrencies, even if the brief depegging of 12 May might have caused concern.
That said, you need to do your own research, remember that prices can go down as well as up, and never invest more money than you can afford to lose.
What will Tether be worth in 2025?
Ideally, Tether should be worth $1 – that is what it is intended to do. A USDT price prediction from DigitalCoinPrice suggests it will should be $1.01 in 2025, while Gov Capital has an average Tether price prediction of $2.558 for 19 August 2025.
These predictions should be taken with a pinch of salt, however. One would expect that, because the USDT price is designed to be $1, its creators will do everything they can to peg the price to the dollar. Remember that forecasts are very often wrong, too.
Where to buy Tether
If you want to buy Tether, you can do so at a range of exchanges. Just remember to do your research and never invest more than you can afford to lose.