Tether (USDT) is now the third biggest cryptocurrency by market cap after climbing above Ripple’s XRP token.
And with a market cap of $9.2 billion many are wondering if it will catch Ethereum and take the number 2 slot.
Will Tether Overtake Ethereum for Number 2 Spot?
According to a Bloomberg report, the financial media giant says they expect Tether to eventually climb above Ethereum.
It’s not so long that tether wasn’t even a top ten coin, so with its steady rise up to third spot, who would bet against it? Bloomberg seem to be.
‘We see little upside in the ETH price absent a rising tide from Bitcoin,’ said the Bloomberg report. ‘The pre-eminent crypto is breaking away from the pack in terms of adoption and is supported by almost-ideal macroeconomic conditions for stores-of-value amid quantitative easing.’
Although the USDT market cap would have to x200% for it to happen, with world events such as coronavirus, many are turning to digital dollars, including governments.
With real-world dollars hard to come by many foreign corporations and governments are believed to be using stablecoins as a way of getting access to dollars. And if this trend continues, we could see a major surge in the stablecoin market, which Tehter has the lion’s share.
But What of Ethereum?
Will Ethereum cave in as easily as XRP did? Well, there’s a major difference with the two: XRP isn’t ETH.
There is so much more utility and development taking place on the Ethereum network. The Ethereum eco-system is by far the busiest and most worked on, and the big money is taking note.
Just looking at the growth of Grayscale Ethereum Trust (ETHE) shows you that institutional interest is rising. Since launching last year, the firms’ AUM has grown from $11.7m to $276.5m in the year since launching.
And to add more fuel to that fire, Grayscale actually issued another 1 million ETHE shares in the last three weeks alone, so the interest from the “smart money” is real.
Coincidently, Tether’s decision to move its Ethereum-based USDT onto OMG Network’s brand new plasma chain is also a huge benefit to the Ethereum network.
And although it won’t directly affect the market cap of either cryptocurrency, the freeing up of much of Ethereum’s congestion will make a more attractive platform in the short term.
This is just the beginning for OMG and Ethereum, however, and in time the plasma chain will blossom and transact at much bigger scale than even the thousands per second the OMG Network are claiming for now.
As well as OMG’s sidechain for Ethereum we are almost set for the launch of Ethereum 2.0. With Phase 0 almost upon us it will see Ethereum launch the beacon chain and usher in first move from a proof-of-work algorithm to proof-of-stake.
Although the beacon chain will not have much influence in the early days, it will be a major boost for the Ethereum community, who have waited so long for the transition to start, and this should be reflected in the price.
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Tether is a long way behind Ethereum and will need to x3 in market cap, which is no small feet. That said, however, with the scarcity of dollars in the world financial system, many are turning to USDT and other stablecoins.
It will only take a bit more interest and confidence in them to see billions more pumped into Tether.
But the same can be said about Ethereum. Many believe the worst days of the bear cycle are behind us, and we are now entering a bull phase.
And with all the interest and development going on around Ethereum, it is also likely to rise in value.
If truth be told, it doesn’t really matter if Tether overtakes Ethereum, they’re not rival platforms and serve two completely different purposes, and even if it did, that value in Tether usually goes into crypto during the bull cycles.
Author: Tommy Limpitlaw