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Glassnode, the On-chain data analytics provider shared a new finding. This time it relates to USDT on-chain fundamentals. According to the new metrics, it shows that the users are withdrawing their Tether stablecoins from the exchanges less often than they used to. It also shows that in terms of activity, there have been reduced levels of activity surrounding USDT wallets. This means that the USDT on-chain fundamentals to do with wallets, as well as coins withdrawn from exchanges, is showing a famine-type decline.
Source: Twitter
Glassnode alerts which is the official twitter handle of Glassnode published a tweet with a graph depicting this decline. As per the chart, the amount of USDT withdrawals from the cryptocurrency exchanges has actually hit a 5-month low. As per the graph, the value currently totals 1,160.833. When this metric was last measured in the month of May, that was the previous recorded low at 1164.208.
Source: Glassnode
What stands out is that since May the $USDT number of exchange withdrawals has been hovering between 1.5k and 3k levels. We see a sudden exploding of the number of exchange withdrawals somewhere between June and July when it reached a mammoth figure of 9k and all of a sudden in the month of July itself, it came down back to the earlier levels.
Tether has been surrounded by several legal issues off-late but despite all that the USDT still remains the much talked about and the most popular USD-backed stablecoin. A majority of the exchanges especially the top ones existing in the system have USDT in their trading pairs. As any stablecoin should, investors view USDT as a safe haven whenever the crypto market turns very volatile especially when they begin to drop.
Glassnode also had some interesting observation to be made on this metric,
“The total count of transfers from exchange addresses, i.e. the number of on-chain withdrawals from exchanges. These metrics are mutable – the data is stable, but especially most recent data points are subject to slight fluctuations as time progresses.”
One of the positive aspects of this trend is how more liquidity is present on exchanges. Bitcoins as well as top altcoins are traded mainly against USDT and liquidity has to be maintained at all times. But, the off-side is that too much liquidity can trigger uncalled for market volatility. But this low surely must make us wonder what actually is going wrong because exchanges have not stopped processing USDT withdrawals all of a sudden!
It is possible that the traders are using USDT to trade more frequently. Bitcoin as well as altcoins have proven to be volatile in recent weeks. Day trading and high-frequency trading carry humongous risks but also yield greater rewards. Hence exploring this option should be done only by those who have explosive knowledge and a high-risk appetite. But if this sentiment is the reason, it is still not clear.
Source: Messari
Out of the top USDT trading pairs, three out of five are pegged to the US dollar. This seems to assure that people could be either converting from US$ to USDT or vice versa.