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As a regional banking crisis in the US expands and regulatory oversight on crypto companies intensifies, investors within the crypto realm are shifting their focus to tokens and coins regarded as relatively secure. In this climate, Tether has emerged as the leading stablecoin, with its market value skyrocketing since March.
Tether's worth is secured by a one-to-one peg against a reserve of dollars and a capped supply of approximately 85 billion tokens. The demand for the coin has been so robust that its peg remained above $1 last April, hitting 1.002 last week.
Anders Kvamme Jensen, founder of the AKJ global brokerage and digital asset specialist based in Oslo, believes that the ongoing banking crisis is driving "hyper-bitcoinization," ultimately rendering the dollar valueless. This has prompted investors to flock to prominent cryptocurrencies like Bitcoin and Ether, according to Jensen.
Stablecoins such as Tether, on the other hand, are viewed more as a store of value and a means to facilitate transfers between cryptocurrencies, as well as collateral for derivative trades. Conor Ryder, a research analyst at digital assets data provider Kaiko, asserts that Tether's premium signals growing trust in both its peg and its perceived security from the US Securities and Exchange Commission (SEC).
Tether is owned by iFinex Inc, a British Virgin Islands-registered company that also owns the Bitfinex cryptocurrency exchange. Its primary competitor, USDC, managed by Boston-based Circle, has suffered due to its exposure to the collapsed Silicon Valley Bank and the SEC's scrutiny of fintech and crypto firms.
Jensen claims that Tether is perceived as being less US-centric, thus implying lower regulatory risk. "Buying Tether and Bitcoin is really a vote against the US system," he says.
It should be noted that Tether has long faced skepticism regarding its peg being supported by dollar reserves. Last year, all stablecoins were impacted by events such as the collapse of the crypto hedge fund Three Arrows Capital, the de-pegging of Terra USD, and the failure of crypto exchange FTX.
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