Bloomberg Intelligence commodity strategist Mike McGlone says a relative crypto newcomer could surpass Ethereum as the second-largest crypto asset by market capitalization in 2021.
Tether (USDT) overtook XRP in 2020 to become the third-largest crypto by market cap, after Bitcoin and ETH. The dominant stablecoin has seen massive surges since the coronavirus-related market crash in March, and it currently has a cap of about $15.7 billion, according to CoinMarketCap.
In a new edition of the Bloomberg Crypto Outlook, McGlone says he thinks that the ballooning market cap will only continue to increase.
“The rapid rise in the market cap of stablecoins indicates that central bank digital currencies (CBDCs) are a matter of time, in our view. It should take something significant to stall the increasing adoption of Tether, the top stablecoin, which is on pace to match the capitalization of Ethereum in a bit less than a year, based on the regression trend since the start of 2019.”
It’s an ambitious prediction. Ethereum’s market cap is currently hovering around $44 billion, almost three times the size of Tether’s.
McGlone notes that USDT “represents what many of the so-called cryptocurrencies aren’t: a stable form of payment.” He also says assets are migrating from the still-deflating crypto bubble of 2017 towards Tether.
Additionally, the commodity strategist predicts Bitcoin is on track to breach key resistance at $14,000, and he says certain metrics indicate BTC could hit $100,000 by 2025.
Other analysts have pointed to a link between Tether’s growing market cap and BTC price increases.
A highly-cited pseudonymous analyst, known in the industry as Filbfilb, says that USDT’s $10.9 billion rise this year suggests traders are storing their capital in the dollar-pegged stablecoin as they prepare to buy BTC.