Tether has stabilized, but not for long

USDT temporarily restored parity with the US dollar tonight. Amid growing competition from other stablecoins launched on behalf of major players in the crypto industry, Tether continues to fight with massive buybacks of previously issued tokens.

Omni Explorer data shows that Tether Limited purchased another 100 million units of USDT, reducing the circulating supply of tokens to approximately 1.8 billion. 

Since the beginning of October, Tether has bought back a staggering number of coins, more than double the 452 million that were in circulation at this date last year. 

Bitfinex, an exchange that shares common ownership and management with Tether Ltd., sent $990 million to a wallet controlled by Tether Ltd., known as the “treasury.” These coins are considered removed from circulation, although in fact last week Tether only burned $500 million worth of tokens.

As a result, Tether's market capitalization has fallen by more than $1 billion this month. 

On the night of November 1, the coin was trading at $1 - $1.2. The reason for such a short uptrend is still unknown. At the time of writing, the price of Tether is held at $0.99 according to CoinMarketCap materials. 

Curiously, exchanger Kraken, which allows traders to exchange tokens directly for dollars, has consistently priced USDT several percentage points below the global average rate in recent days. Thus, in mid-October, Tether was trading at $0.85 on the exchange. This morning, the price of $0.99 was equal to the global average trading price.

Meanwhile, Tether’s competitors, in particular, TrueUSD (TUSD), Gemini Dollar (GUSD) and Paxos Standard (PAX)continue to show rapid growth. Collectively, the market capitalization of these three stablecoins now exceeds $400 million. This means that traders view these “regulated” tokens as more trustworthy than USDT, whose issuer has repeatedly been criticized for opaque transactions, bank fraud and collusion with the Bitfinex crypto exchange.