• Tether has announced positive profits in Q1 due to the influx of USDT demand.
• The company expects more than $1 billion in revenue from USDT, with a profit of $700 million for the quarter.
• Despite Tether’s success, there are concerns about its ability to provide proper reserves.
Tether Reports Positive Outlook for Q1 Profits
Tether has expressed optimism regarding its Q1 profits as March ends. According to the company’s latest report, it expects more than $1 billion in total revenue from USDT in Q1, with a projected profit of $700 million for the quarter. This is due to an influx of demand for USDT resulting from migration from USDC and an increase in circulating supply.
Increase in Transfer Volumes
The stablecoin segment has experienced a lot of activity during the first quarter, particularly following USDC’s depegging. Many users migrated from USDC to USDT, contributing to the volume surge and resulting in an increase in transfer volumes that peaked mid-February and again on March 11th due to inflows caused by USDC migration. However, transfer volume has since then dropped due to outflows as cryptocurrency demand surged.
Concerns About Reserves
Despite Tether’s positive outlook for Q1 profits, there are concerns about its stability and ability to provide adequate reserves for its USDT stablecoin. Recently, the SEC criticized Tether and USDT by stating that proof of reserves was meaningless when addressing investors; adding doubt about whether or not Tether could fulfill its commitments if needed.
Wu Blockchain Commentary
CNBC reported Wu Blockchain’s (@WuBlockchain) commentary on Twitter: “The value of all the USDT in circulation has grown substantially this month from $70.98 billion on March 1st to $78.14 billion on Thursday.“
Overall, while Tether is expecting positive profits this quarter with increased demand and rising circulation numbers, there remain some reservations over their ability to guarantee sufficient reserves should they be called upon them do so.