As the cryptocurrency market experiences significant volatility, the on-chain activity of Tether (USDT) has recently surged to a six-month high. Data released by blockchain analytics platform Santiment on March 12 revealed that on March 11, the number of USDT transfer wallets exceeded 143,000 in a single day, marking the highest level since September 2023. Analysts suggest that the spike in Tether’s activity often signals that traders are accumulating stablecoins to prepare for potential market rebounds.
This development coincides with Bitcoin’s price dropping to a four-month low of $76,700, as macroeconomic uncertainties and escalating geopolitical tensions have eroded some of the gains made in the cryptocurrency market following the U.S. election. Vincent Liu, Chief Investment Officer at Kronos Research, noted in an interview that traders typically accumulate USDT during market downturns to seize buying opportunities. He emphasized that the surge in USDT’s on-chain activity is a classic indicator of market readiness, with increased liquidity potentially translating into buying pressure that could accelerate the recovery of crypto asset prices.
Liu added that the recent spike in USDT activity could be driven by multiple factors: heightened global economic volatility, evolving regulatory dynamics in the crypto industry, and Tether’s role as a “safe haven.” He specifically highlighted that the U.S. inflation rate dropping to 2.8% in February, below market expectations, could alleviate selling pressure in the crypto market. Additionally, the upcoming Federal Open Market Committee (FOMC) meeting might provide further guidance on interest rates and monetary policy, potentially boosting risk asset sentiment.
Notably, while the Crypto Fear & Greed Index has rebounded from its “extreme fear” level in late February, it remained at 45 as of March 13, still within the “fear” zone. Against this backdrop, the surge in USDT’s on-chain activity is particularly significant. Santiment’s analysis team pointed out that when stablecoins like USDT see increased circulation during price declines, it often indicates that investors are shifting funds from volatile assets to stablecoins, positioning themselves to act swiftly when the market bottoms out.
Meanwhile, Tether’s global use cases continue to expand. Paolo Ardoino, CEO of Tether, recently revealed at the Cantor Fitzgerald Global Technology Conference that approximately 37% of USDT holders use it as a “digital savings tool for the unbanked.” He emphasized that Tether not only provides a dollar-denominated storage solution for users in emerging markets but also serves as a strategic pillar in defending the U.S. dollar’s dominance amid growing concerns about de-globalization. Ardoino also disclosed that Tether has collaborated with law enforcement agencies to freeze over $2.5 billion in USDT linked to illicit activities, further strengthening its compliance framework.
In summary, the six-month high in USDT’s on-chain activity reflects both traders’ short-term tactical positioning and Tether’s indispensable role in the crypto ecosystem. If macroeconomic conditions and regulatory policies become more favorable, the capital held in this “reservoir” could catalyze a new rebound cycle in the cryptocurrency market.
