- Tether purchased 8.9K bitcoin for around $380 million in Q4 2022 as part of its strategy to diversify USDT reserves
- The purchase makes Tether the 11th largest holder of bitcoin with over $1.5 billion worth in reserves
- Tether aims to offset crypto volatility and maintain USDT’s dollar peg amid competition from rival stablecoins like USDC
The stablecoin issuer announced in May 2023 that it would start buying bitcoin in an effort to diversify the backing of its USDT stablecoin.
Tether Reportedly Bought 8.9K Bitcoin for $380M, Remaining 11th-Largest BTC Holder
Tether has purchased another 8,900 bitcoin for around $380 million, according to the latest disclosures from the stablecoin issuer.
The purchase, made toward the end of the fourth quarter, means Tether now holds about $1.5 billion worth of bitcoin in its reserves, making it the 11th-largest holder of the cryptocurrency.
Tether’s Bitcoin Purchases
In May 2022, Tether said it would start buying bitcoin to diversify its reserves amid concerns over the stablecoin’s dollar peg. At the time, Tether said its bitcoin purchases would be made in a routine manner and that it did not plan to actively trade or hedge the bitcoin.
According to Tether’s latest disclosures, it made two purchases of bitcoin in the fourth quarter:
- 4,000 BTC on October 3 for around $200 million
- 4,900 BTC on November 9 for around $180 million
This takes Tether’s total bitcoin holdings to around 8.8K BTC. With bitcoin currently trading around $17,000, Tether’s bitcoin reserves are worth just over $1.5 billion.
That makes Tether the 11th-largest holder of bitcoin after MicroStrategy, Tesla, public companies, and crypto exchanges, according to BitcoinTreasuries.com data.
Backing of USDT Stablecoin
Tether redeems and issues its USDT stablecoin in exchange for fiat currency reserves.
The purchases of bitcoin form part of Tether’s efforts to diversify those reserves away from purely cash and cash equivalents. Tether has also bought gold to back USDT.
Tether said its motivations for buying bitcoin included “providing utility to its users” and offsetting “crypto market volatility.” The stablecoin is designed to maintain a 1:1 peg with the U.S. dollar but has strayed from the peg during crypto market turmoil.
Tether remains the largest stablecoin with a market cap of around $66 billion. However, its dominance has slipped dramatically from over 80% in early 2021 to around half of the total stablecoin market currently. Rival stablecoins like USD Coin (USDC) have eroded Tether’s lead.
Conclusion
Tether’s purchase of nearly 9,000 bitcoins in Q4 2022 is part of its strategy to diversify reserves backing the USDT stablecoin. Tether now holds over $1.5 billion in bitcoin reserves, making it a top 12 holder of BTC. However, questions remain about USDT’s dollar peg and whether bitcoin purchases are enough to maintain confidence in the stablecoin. Rivals like USDC continue to gain ground on Tether in the battle for stablecoin supremacy.
