And this is not the first time that we have seen Tether overtaking XRP
The USDT replaced the XRP once again to take third place in market capitalization. Based on Skew data, it reached a new record of $ 18 billion.
USDT Market Cap || Source: Skew
So is Tether taking over from the popular altcoin XRP or is this just a record increase in new demand? By the end of June 2020, Tether had reached $ 10 billion, overtaking XRP for the first time, however, XRP recovered quickly and resumed its position. If this is repeated, XRP is forecasting a 40% jump in market capitalization to reach Tether.
Tether’s growth is driven mainly by demand. And looking at the continued rise in Bitcoin prices and the weekly returns of the top 10 cryptocurrencies based on market capitalization, it is safe to assume that the main factor contributing to this market capitalization is new demand. In the past 3 months, the number of active Bitcoin addresses has increased by more than 5% based on CoinMetrics data.
Number of active BTC addresses || Source: CoinMetrics
With the “smart money” flow scenario, demand on ‘spot exchanges’ is skyrocketing and this may be a major contributor to increasing Tether’s market capitalization. In addition, Tether was already recording more trading volume compared to Bitcoin in recent months.
As Bitcoin left exchanges and moved to private portfolios, reserves fell and both Tether’s turnover and market capitalization increased significantly. For Bitcoin, Tether may not represent competition, despite surpassing it in turnover, however, can the same be said for XRP?
In 2017, XRP was one of the most popular altcoins for transferring funds from one exchange to another in the arbitration community. This was partly due to the speed of transactions and partly to low rates. However, Tether has almost replaced XRP with its high turnover, as it is popular for money transfers between exchanges and international settlements.
The XRP may have established a series of partnerships to remain relevant. Tether, however, with its large market capitalization and deep rootedness in spot exchanges through high-volume markets, has grown enough to reach $ 18 billion. Whether this represents a challenge for XRP or not, it will be known in a few weeks, looking at the market value and price action of XRP.