Even though the Chinese had banned exchanges access to banking services, they continue to drive the market using stablecoins as the tether dollar (USDT). According to CoinMarketCap, the currency activity has reached the highest levels in August. Thus, its marketcap surpassed US$ 4 billion. The currency corresponds to around 40% to 80% of all transactions of Huobi and Binance – the latter offers collateral loans in USDT.
“The crypto traders are prevented from accessing banking services in China, but they are thriving”, said the co-founder of Dragonfly Capital Partners, Alexander Pack, to Coindesk. However, since this asset is favored among counter traders, the official exchange volumes hardly uncover the scenario.
The CoinMetrics data detected an annual peak of activity, on August 7, with 78,100 active wallets for the tether dollar and much of it is related to the Chinese. To get an idea of the volume, the Ethereum recorded almost 21,300 wallets.
Tether has good liquidity in China
In this way, the exchanges who work with tether have conquered a profitable niche in 2019, especially those that provide liquidity to exchange for fiat money.
Two Asian counter traders said in off that a significant portion of the businesses comes from Chinese customers who use the USDT to move assets beyond the rigid capital controls of their homeland.
“This has always been a significant part of OTC flows in crypto assets”, said a Hong Kong trader to Coindesk. For example, his counter led US$ 45 million in negotiations on August 6. Of this sum, the UDST corresponded to more than half.
It is worth remembering that Tether is evaluating to launch a stablecoin pegged to the yuan.
Or would it just be the result of the bull market?
On the other hand, experts believe that this increase in USDT use can be motivated by the enthusiasm for a possible return of the bull market. In this case, this movement would have nothing to do with changes in the patterns of capital flight.
“The tether is the easiest way to maintain a relatively stable volume value in an exchange that does not accept dollars”, said the American trader. “It has much more to do with this network effect than any technology, infrastructure or other advantage”.