Why Did USDT Suddenly Issue 300 Million Amid Price Surge?

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In early April 2025, the stablecoin market witnessed a notable development: Tether (USDT) experienced a surge in both price and supply. On April 9 alone, over $60 million worth of new USDT was issued—a move that, while routine for the issuer, reignited widespread debate across the crypto community. Even more striking was the growing premium of USDT against the Chinese yuan, reaching as high as 4.35%. This phenomenon has sparked discussions about market sentiment, capital inflows, and long-standing concerns over USDT’s transparency and issuance mechanisms.

👉 Discover how stablecoin movements can signal major market shifts.

The Rising Premium: A Sign of Market Revival?

USDT, pegged to the U.S. dollar, typically trades at or near $1. However, in early April 2025, its over-the-counter (OTC) price in China climbed to 7 yuan—significantly above the official USD/CNY exchange rate of around 6.71. This created a premium of over 4%, with earlier readings already showing 2.48% on April 3 and 3.26% by April 4.

Such premiums are not just numerical anomalies—they reflect real market dynamics. When investors seek to enter the cryptocurrency market but face restrictions on direct fiat-to-crypto purchases, they often turn to OTC channels to buy USDT. High demand in these markets drives up the price, creating a premium.

This surge coincided with a broader market rally. On April 2, Bitcoin jumped from $4,200 to over $5,000 within an hour—an unexpected 20% spike. Ethereum followed with gains exceeding 10%, and more than 20 altcoins doubled in value within days.

Market observers interpret the rising USDT premium as a bullish signal. It suggests increasing capital inflow into the crypto ecosystem, particularly from regions where direct access to international exchanges is limited. In this context, USDT acts as a bridge currency—its premium serving as a proxy for investor appetite.

“When USDT trades at a premium, it often means new money is entering the market,” noted one analyst. “It’s not just speculation—it’s real buying pressure.”

How Stablecoins Maintain Stability

Despite being called "stablecoins," assets like USDT are not immune to price fluctuations. Their stability relies on one of three models:

USDT falls into the first category. Tether Ltd., the company behind it, claims every USDT token is backed by an equivalent amount of U.S. dollars held in reserve. Users can theoretically redeem USDT for USD through the Tether platform, although full transparency remains a point of contention.

However, history shows that even fiat-backed stablecoins can falter. In October 2018, USDT briefly crashed by 8% amid rumors of reserve insufficiency and legal troubles linked to Bitfinex. Trust eroded quickly—proving that perceived stability is as important as actual backing.

USDT Issuance: Routine Practice or Cause for Concern?

The April 9 issuance of $60 million in new USDT tokens raised eyebrows—not because of the amount, but due to timing. Within days, total new issuance reached approximately $300 million. Critics questioned whether this constituted "over-issuance" or manipulation.

DGroup founder Zhao Dong argued that increased issuance reflects organic market demand, not reckless printing. He explained:

“If USDT were being artificially inflated to manipulate prices, we’d see it trade below $1—devalued. But instead, it’s trading at a premium. That means demand is outpacing supply, so Tether issues more to meet it.”

His logic hinges on mechanics: when demand rises, exchanges or affiliated entities request new USDT from Tether, depositing equivalent USD into reserves. These newly minted tokens are then sold on the open market, helping stabilize price.

Conversely, during outflows, USDT is redeemed and destroyed—contracting supply.

But not everyone agrees.

The Skepticism Around Transparency

Investor Li Xiaolai, known for his candid takes on crypto markets, dismissed Zhao Dong’s explanation as naive. He retweeted a user’s comment suggesting that up to one-third of circulating USDT could be unbacked, calling it “pseudo-fiat” in the blockchain world.

Critics argue that without regular, third-party audits, there’s no way to verify Tether’s claim of full dollar backing. They also highlight structural risks:

One theory suggests a cycle: issue unbacked USDT → use it to buy Bitcoin → drive prices up → sell high to retail investors → repeat.

Zhao Dong refutes this: “If you inflate the money supply without backing, your currency depreciates. But USDT is appreciating. That contradicts the over-issuance theory.”

Still, skepticism persists—and for good reason. Without full audit transparency, trust remains conditional.

👉 See how top traders analyze stablecoin flows for early market signals.

FAQ: Understanding USDT’s Role in Crypto Markets

Q: What causes USDT to trade at a premium?
A: High demand in restricted markets (like China) where buying crypto directly with local currency is difficult. Investors bid up USDT on OTC platforms, creating a premium over the USD peg.

Q: Does USDT issuance always mean new money entering crypto?
A: Not necessarily—but in times of rising premiums, it often does. Issuance in response to demand suggests real capital inflow rather than artificial manipulation.

Q: Is USDT safe to use?
A: For short-term trading and transfers, most consider it reliable. However, long-term holding carries counterparty risk due to lack of full audit transparency.

Q: Can USDT affect Bitcoin’s price?
A: Indirectly, yes. Large-scale issuance can fuel buying pressure, especially during rallies. Conversely, redemptions may signal bearish sentiment.

Q: Are there alternatives to USDT?
A: Yes—regulated stablecoins like USDC and PAX offer greater transparency and compliance. However, they have less liquidity in certain markets compared to USDT.

Q: Why doesn’t Tether publish real-time reserve data?
A: While Tether releases periodic attestations, it resists full audits citing competitive and security reasons. This lack of openness continues to fuel debate.

A Barometer of Market Sentiment

Despite controversy, USDT remains central to global crypto trading. With a circulation exceeding $25 billion at the time of writing, it serves as the de facto dollar proxy for millions.

The recent premium and issuance spike suggest growing confidence and participation, especially from Asian markets. While skeptics warn of systemic risks, proponents see resilience and adaptability.

One telling detail: while USDT traded at a premium against CNY, its value against USD remained stable within 1%. This divergence underscores that the surge wasn’t due to global dollar weakness—but localized demand.

As Zhao Dong put it: “Continuous issuance means continuous inflow. A major crash isn’t impossible—but it’s less likely when money keeps flowing in.”

Ultimately, USDT functions as more than just a stablecoin—it’s a sentiment indicator, a funding tool, and a lightning rod for debate.

👉 Track real-time stablecoin flows and their impact on crypto markets here.

Final Thoughts

The April 2025 episode reinforces a key truth: in cryptocurrency, even "stable" assets carry narratives. The story of USDT’s rise isn’t just about numbers—it’s about trust, access, and the invisible currents of capital shaping market cycles.

Whether you view USDT as a vital infrastructure piece or a centralized risk depends on your perspective. But one thing is clear: as long as demand exists for a dollar-linked digital asset outside traditional banking systems, USDT will remain both essential and controversial.

For investors, monitoring stablecoin behavior—issuance trends, premiums, and redemptions—offers valuable insights into market health and potential turning points.

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