U.S. Dollar Tether (USDT) Supply on Major Centralized Exchanges Is Rocketing

U.S. Dollar Tether (USDT), the largest USD-pegged stablecoin, hit a new record in deposits on centralized exchanges.

The supply of U.S. Dollar Tether (USDT) on major centralized cryptocurrency exchanges has surged rapidly since the beginning of the bull rally in early November, according to CryptoQuant. This development could potentially serve as an indicator for the approach of the next phase of crypto price increases.

As per data from CryptoQuant, traders have deposited over $12.5 billion in USDT into centralized exchanges (CEXes) following the U.S. presidential elections. This massive inflow of USDT liquidity has led to a 43% increase in the stablecoin's net exchange volume, bringing it to a record high of $43 billion in less than three months.

"Stablecoins just hit new highs on exchanges.

Since November 4, USDT has surged from $30.5B to $43B (up 41%), boosting market liquidity.

Historically, more stablecoins often mean higher prices."

The net capitalization of the stablecoin segment has also surged during this period, rising from $167 billion to $204 billion, according to CryptoQuant. This metric, which measures the total market cap of stablecoins excluding those used as collateral for loans or other instruments, has also reached record levels with a 22.1% increase from November to January.

Considering that stablecoin liquidity can only be utilized for purchasing Bitcoin (BTC) or altcoins, the high concentration of stablecoins on CEXes may suggest the buildup for the next leg of the BTC rally.

For context, during the most severe phase of the crypto downturn in 2021-2022, following the collapse of FTX and Alameda, the net exchange volume of stablecoins stood at $18 billion. At the time, the total stablecoin segment market cap was around $140 billion, nearly 30% lower than current levels.

Meanwhile, the stablecoin segment continues to be highly centralized, with USDT maintaining dominance at around 66%. However, the largest stablecoin faces competition from Circle's USDC, which is emerging as a strong rival.

As reported by U.Today, CryptoQuant recently highlighted USDC as the fastest-growing stablecoin in recent months, with its market cap surging from $35 billion to over $52 billion in three months.

The position of USDT may also be threatened by the introduction of new regulated stablecoins, such as Ripple's RLUSD, and the potential delisting of certain stablecoins for EU customers under MiCA.

For instance, starting Jan. 31, 2025, USDT will no longer be available to European users of Tier 1 exchange Crypto.com due to the upcoming regulatory measures.