I love that there’s 8 Billion Tethers but USD/USDT volume on Kraken, one of only two places to trade Tethers for dollars, almost never cracks a Million.
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That’s because people convert to BTC and then sell that for USD. The fact that USD/USDT pairs have low volume means nothing
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So I agree there's very low USDT/USD exchange volume and lots of BTC/USDT + BTC/USD volume. But it's kinda weird! There's a ton of OTC USDT/USD volume. I'm surprised that e.g. ftx.com/trade/USDT/USD doesn't trade more.
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Like here's a weird fact: FTX has both OTC and spot markets for BTC/USD and USDT/USD. As it turns out most of the USDT/USD on FTX trades OTC, but a lot of the BTC/USD trades spot. Not sure why people choose one or the other.
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This is my theory
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Replying to @CasPiancey
I think the main reason for this phenomenon is that transacting Omni USDT wasn’t super intuitive. So people learned to convert to BTC, send to fiat off ramp and dump it there. Now that USDT is mostly on Ethereum, I expect this trend to slowly fade away as it’s much easier
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That's reasonable--could also be that the people using USDT/USD were not really trading firms and so liked OTC > exchanges, but people trading BTC/USD[T] were traders and so liked exchange interfaces.