Tether, the issuer of the stablecoin USDT, recently announced its intention to invest up to 15% of its profits in Bitcoin (BTC) in order to strengthen and diversify its reserves. By making such investments, Tether hopes to not only increase its reserves, but also provide a clearer view of its performance and capital allocation strategy.
Tether focuses on Bitcoin
Shortly after releasing its first quarterly report for 2023 reporting $1.5 billion in net profit, Tether, the issuing company of the USDT stablecoinannounces that she will now invest up to 15% of its profits in Bitcoin (BTC) in order to “strengthen and diversify” its reserves.
When publishing its latest report, Tether indicated that its reserves were made up of 1.5% Bitcoin ($1.5 billion) and 4% gold ($3.4 billion). The rest is made up of cash or cash equivalents and short-term deposits such as treasury bills.
The company announces that it will also be the sole holder of its future Bitcoins, referring to the maxim “Not your keys, not your Bitcoins”. The move also aims to strengthen, increase and diversify the reserves of the USDT issuer, while providing a “ clearer view of business performance and capital allocation strategy », as developed by Paolo Ardoino, the CTO of Tether :
“The decision to invest in Bitcoin, the world’s first and largest cryptocurrency, is underpinned by its strength and potential as an investment asset. Bitcoin has continually proven its resilience and established itself as a long-term store of value with substantial growth potential. Its limited supply, decentralized nature, and widespread adoption have made Bitcoin a preferred choice for institutional investors and individuals. »
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A first massive investment?
If we refer to Tether’s latest report, the company is expected to invest very soon about $222 million in Bitcoin.
Given the phenomenal growth Tether is seeing, especially since the recent depeg of its main rival, Circle’s USDC, the company should quickly establish itself among the largest holders of BTC such as Galaxy Digital Holdings, MicroStrategy, Voyager Digital, Marathon Digital or Tesla.
As we can see below, Tether’s USDT now outperforms Circle’s USDC, and is also preparing to touch the 83 billion dollars of market capitalization. Since its passing depeg, USDC’s market capitalization has fallen from $43.2 billion to $29.4 billion, representing a loss of approximately $13.8 billion.
Evolution of the market capitalization of USDT (in green) and USDT (in blue)
With a view to transparency and in order to reassure certain investors about its sometimes questionable past, the company decided to reduce its commercial paper holdings to zero last February, and also opted for less risky methods such as Treasure. Some, however, continue to criticize its lack of auditwhich the company had promised some time ago.
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Sources: Tether, DefilLlama
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