- Tether minted 1 billion USDT tokens on the Ethereum blockchain amid market upswing driven by hopes of a spot ETH ETF approval by the SEC
- This minting activity is seen as a strategic move by Tether to provide liquidity ahead of a potential market rally triggered by an ETH ETF approval
- The new USDT tokens are classified as “authorized but not issued,” meaning they are not yet in circulation or included in USDT’s current total market cap
Tether, one of the largest stablecoin issuers, minted 1 billion USDT tokens on the Ethereum blockchain on May 21, 2024. This comes as the crypto market is anticipating a potential approval of a spot ETH ETF in the coming days.
Massive minting by Tether
Whale Alert first reported the minting, which was later confirmed by Tether CEO Paolo Ardoino. Ardoino stated this was an “authorized but not issued transaction”, meaning the USDT will be used as inventory for future issuance requests and chain swaps.
Market analysts suggest Tether’s new minting is a strategic move ahead of a potential crypto market rally triggered by an ETH ETF approval. Ivan Sherbakov, CEO of Cryptorobotics, said this minting will provide liquidity to pump the market on positive ETF news.
Correlation between USDT supply and market movement
Data shows a correlation between increasing USDT supply and upward movement in the broader crypto market, leading to higher volumes and more activity.
Usually, Tether’s inventory replenishment involves creating new USDT tokens to meet anticipated customer demand. These authorized but unissued tokens are held in Tether’s treasury until needed.
According to Tether’s Transparency page, there were $878 million worth of such USDT on Ethereum as of May 21. Over the past year, Tether’s market cap has grown significantly, surpassing $110 billion and controlling around 70% of the stablecoin market.
Reasons behind Tether’s growth
This growth can be attributed to several factors, including the successful launch of spot Bitcoin ETFs in the US. Moreover, Tether has diversified its operations beyond USDT into sectors like Bitcoin mining.
Conclusion
Tether’s substantial minting of new USDT comes as anticipation builds for a potential ETH ETF approval. The move aligns with Tether’s past inventory replenishments before periods of heightened market activity. With Tether controlling a majority of stablecoin market share, its strategic minting may help provide liquidity for any crypto rally spurred by positive ETF news.
