Tether to Retrieve All Lost Market Value, In Part by US Crackdown

Tether is expected to recover all of its lost market value during the collapse of algorithmic competitor TerraUSD less than a year ago. The stablecoin operator's assets dropped almost 20% in the second quarter of 2022.

Retrieving Lost Market Value

After the collapse of algorithmic rival TerraUSD last 2022, Tether is in the middle of recovery of regaining all of the market value lost last year. According to Bloomberg's report, the company had assets totaling around $81.4 billion, supporting its USDT token as of April 21.

Last May 2022, the amount reached a peak of about $83 billion, which is only now $2 billion dollars away from reaching this now. During those times, Terra prompted investors to dump cryptocurrencies across the board, which led to Tether's assets dropping almost 20% in the second quarter.

Retrieving almost all of its lost market value just proves Tether's dominance in the crypto market as a means for conducting transactions and storing value. The crypto company achieved this by benefiting from baking turmoil this year, weight on reveals like Circle's USD Coin, and the rally that becomes Bitcoin's indicator to gain an increase of 70% in the market.

CNBC reported that Tether is supposed to be backed by cash, which is a short-term debt obligation by its users related to an equivalent amount of their deposited money. This serves as essentially like a bank account made for crypto investors, who often turn to tether in times of increasing tensions in the market.

Analysts' Takes

Straits Times reported that as per Galaxy Digital Head of Research Alex Thorn, the amount of Tether in circulation usually rises during rallies, which decreases declines in the bear market. Meanwhile, Wave Digital Assets Head of Decentralized Finance Henry Elder said that large investors have also been exiting profitable trades and parking proceeds in Tether.

As per Coin Desk, a hearing from the House of Representatives was done last week, focusing on stablecoins that indicated a deep rift between Democrat and Republican lawmakers. This comes at the same time that the US Securities and Exchange Commission and several state regulators ramped up restrictions.

For an instance, Paxos Trust stopped the issuance of the BUSD stable coin that is branded by Binance after New York regulators and the SEC pushed back the company. BUSD's market cap has been down in the market for around 60% since earlier this year.

Aside from this, SEC also declared UST as an unregistered security. This is a stablecoin provider that experiences deviation from its intended peg, triggered by the failure of the Terra-Luna ecosystem.