Is Tether’s USDT shaping up to be a rebound catalyst this cycle?
The stablecoin’s market cap is set to record its third consecutive daily increase in liquidity. However, the inflows are limited to only $310 billion, limiting risk-on sentiment.
In this context, Tether’s latest move to unfreeze $1.45 million USDT in four THORChain vaults could be sufficient to alleviate concerns about the choppy stablecoin market.
What did Tether’s USDT unfreeze change?
To put the recent action into perspective, Tether had frozen four THORChain USDT vaults on the TRON blockchain, disrupting the trading and liquidity functions of the stablecoin. The initiative has been reversed three hours after the implementation, while the remaining 19 blockchain addresses have been frozen.
The key detail here is TRON’s growing role in USDT transfers.
According to Lookonchain, USDT supply on TRON increased by $18.67 billion over the past year to $94.25 billion. That represented a 24.7% increase.
With that much USDT on TRON, interruptions to liquidity operations could affect traders relying on the network. The vault freeze restricted access to $1.45 million within THORChain’s affected vaults.
Unfreezing them allowed the affected operations to resume. That eased an immediate bottleneck. Whether available liquidity would translate into fresh buying remained a separate question.
Tether’s USDT move puts key on-chain signals in focus
The timing of this USDT unfreeze could not have come at a better moment.
Technicals are pointing to a risk-off move, and Bitcoin’s $80,000 level is under pressure. While the continued increase in the stablecoin’s market cap should be bullish, it has not yet led to increased demand for altcoins, evidenced by Google searches for “Buy Altcoins” being at their lowest level since 2026.
The key takeaway?
USDT dominance is retracting from the mid-September resistance level of 6.7%. This shows that the situation regarding liquidity is changing.
Investors who have been accumulating USDT may be reducing the amount of capital on the sidelines as dry powder.
Given this situation, it becomes clear that Tether’s decision to move USDT was not random.
By unlocking the four THORChain vaults, Tether allowed the affected liquidity operations to return to normal. This action is expected to ease the liquidity flow and reduce the friction in cross-chain transactions.
With the fall of USDT dominance and the growth of the stablecoin’s market cap, the liquidity conditions will become more suitable for the market rebound.
According to AMBCrypto, this means that the market top is not near. In turn, the fresh inflows of USDT can act as a catalyst for renewed buying if the capital rotates back into risk assets.
Final Summary
- Tether’s USDT unfreeze could improve liquidity and support market recovery.
- Rising stablecoin supply could fuel a rebound if investors return to crypto.