Tether's great power in the crypto sector is due to the fact that it is a stable anchor in the rough sea of cryptocurrencies .
Its role as a stablecoin allows crypto traders to maintain a steady value in a market that can be highly volatile.
In this way, USDT has managed to position itself in the top 3 cryptocurrencies with the highest market capitalization (although it is not exactly a cryptocurrency). In addition to being the largest stablecoin in terms of market capitalization.
Throughout this article we will analyze the power behind Tether and the functionalities that have allowed it to achieve its current role and position.
First and for the sake of confusion, let us remember that Tether Limited Inc. is the company that issues Tether (USDT). While the latter is the stablecoin issued by said company, and is designed to maintain a value equivalent to the US dollar (USD).
Tether's great features and utilities
As we said at the beginning of this article, this stablecoin is a stable anchor in the turbulent sea of cryptocurrencies. That is, while the price of BTC can rise or fall by 12% (or more) in a single day, the price of Tether will always be worth 1 USD and its variations are minimal.
Using a different metaphor, this stability offers traders a safe haven to run to during times of great storms in the crypto sector. That is, in times of downfall, investors can take refuge in USDT to avoid major losses in value in the turbulent market.
Later, when the dust has settled, traders can switch their stablecoins In that case, due to its speed and its use in most exchanges, this is the best liquidity asset that can be had to buy cryptocurrencies immediately in whatever amount we want.
back to cryptocurrencies to take advantage of large upswings.
In that case, due to its speed and its use in most exchanges, this is the best liquidity asset that can be had to buy cryptocurrencies immediately in whatever amount we want.
At the same time, this stablecoin allows less risk-tolerant traders to participate in the crypto market, without the need for the high risks that other cryptocurrencies entail.They can thus participate in activities such as staking, decentralized lending, arbitrage, farming, and many more activities within the crypto ecosystem.
However, the greatest utility that Tether can have within the crypto ecosystem is to be a bridge between fiat money and crypto assets.
Tether as a bridge between traditional money and cryptocurrencies
Being backed by fiat currency reserves, Tether provides a way to move money from the traditional financial system into cryptocurrencies. This way, people can move money without having to directly convert between volatile cryptocurrencies and fiat currencies.
This is particularly useful for merchants and businesses that need a reliable digital currency to operate in both worlds without significant risks of change in value.
In this way, large institutions can directly purchase USDT from Tether Limited Inc using fiat money in a legal and transparent manner. Although it should be noted that this was particularly useful in the past, when companies and individuals did not have the wide range of legal options that they have today to exchange fiat money for crypto assets. Today, the options are greater.
Analyzing Tether's Huge Influence and Strong Market Cap
Tether's influence on the crypto market stems from the fact that its widespread adoption has facilitated transactions and increased liquidity on cryptocurrency exchanges, making it an essential tool for many investors.
Furthermore, despite not being a centralized alternative and playing the same role as fiat money, Tether is widely used in decentralized finance applications, providing a reliable stablecoin for lending, staking, and other operations.
In this way, it has enormous influence, not only by being part of the trade between cryptocurrencies and fiat money, but also by being part of the activity within the blockchain ecosystems.
All of these qualities that we have mentioned are what have given Tether a large market capitalization that today triples that of the second largest stablecoin in existence: USDC .
It's not just about capitalization, Tether Holdings has reported significant earnings in 2024, anticipating a net profit of over $10 billion. During the third quarter, Tether recorded $2.5 billion in earnings, bringing the cumulative total to $7.7 billion for the year.