Crypto investors have begun to look to USDT and USDC stablecoins to protect themselves from market turmoil. The obvious winners of the crash were the stablecoins that are tied to the U.S. Dollar. But, it appears investors have taken it one more step. Investors are increasing their investments in stablecoins by seeing USDT across the Ethereum blockchain.
USDT provides much-needed coverage
Only a few cryptocurrencies managed to maintain their value despite the downtrend in crypto markets. All of these stablecoins were able to provide investors with some protection, even though some had lost their peg. It is evident that investors convert to stablecoins in order to weather bear markets by moving USDT every day.
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The volume of Tether USD transactions on Ethereum reached an all-time record high on May 12, 2012. According to data, the Ethereum network has moved USDT in excess of $33 billion. This amount is considerably higher than the $24.5 million USDT transaction on February 4, 2021.
Source : USDTUSD on TradingView.com| Source: USDTUSD on TradingView.com
The motives for both records were the same: Investors wanted to get out volatile digital assets in favor of an asset with stability. This was because these investors were not ready to sell their digital assets in fiat currencies. However, assets such as USDT or USDC can be used to hold funds and wait out the bear markets.
Ethereum Fees are on the Rise
Investors who have moved into USDT stablecoins like USDT have brought increased transaction fees to the Ethereum network. The network has seen a lot of volume, resulting in hundreds of thousands of transactions. As such, it is likely that the fees for processing these transactions will increase.
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The network recorded large numbers of transactions on May 12, and this was true. In this 24-hour period, gas fees to the network were as high as $20 for USDT transactions. In 24 hours, there were 182,000 Tether transaction.
Market cap is not reflecting this high demand for stablecoin despite it being in great supply. It has fallen by 3.34% over the past 24 hours, instead of growing. It is still a popular choice for investors as the biggest stablecoin on the market.
One USDT sells for $0.9988 at the time this article was written. This is a very close match to the U.S. Dollar.
Featured Image from Wccftech. Chart by TradingView.com