Tether (USDT) Brings $150 Billion Stablecoin Market to Dubai: BTC, ETH Prices Could React

Tether to Develop New Stablecoin For Dubai Residents

Tether (USDT), the world’s largest stablecoin issuer announced plans to launch a new Dirham-pegged stablecoin in collaboration with UAE resident companies.

This move marks a significant expansion of Tether’s global footprint and could have far-reaching implications for the broader cryptocurrency market.

The introduction of a stablecoin tied to the United Arab Emirates Dirham (AED) not only solidifies the UAE’s position as a crypto hub but also introduces new dynamics that could influence the price movements of major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).

Tether Announces Dirham-Pegged Stablecoin

Tether has announced the creation of a stablecoin pegged to the United Arab Emirates Dirham (AED), expanding its portfolio of currency-pegged tokens.

This initiative, developed in partnership with UAE-based Phoenix Group PLC and Green Acorn Investments Ltd, underscores Tether’s strategy to deepen its presence in the Middle East.

Each Dirham-pegged token will be fully backed by liquid reserves based in the UAE, ensuring a stable value tied to the AED. The stablecoin aims to facilitate international trade, remittances, and digital transactions, offering a hedge against currency fluctuations.

According to Paolo Ardoino, CEO of Tether, the UAE is emerging as a significant global economic hub, and the new stablecoin will provide users with a secure and efficient means of transacting in AED.

Other Stablecoins Issued by Tether

The global market for stablecoins is currently valued at approximately $150 billion, with Tether’s USDT commanding about $120 billion in market share. Projections suggest the market could grow to $2.8 trillion by 2028, reflecting the expanding role of stablecoins in the global financial landscape.

The new Dirham-pegged stablecoin joins Tether’s lineup of other currency-backed tokens, including USDT (U.S. dollar). As of the most recent data, Tether issues several stablecoins aside from USDT (which is pegged to the U.S. dollar). These include:

• EURT: Pegged to the Euro.
• CNHT: Pegged to the Chinese Yuan (offshore).
• MXNT: Pegged to the Mexican Peso.
• XAUT: Represents ownership of one troy ounce of gold.
• GBT: Pegged to the British Pound.
• Tether Gold (XAUT): Represents physical gold ownership.

These stablecoins are designed to provide the same liquidity and stability as USDT but are pegged to different fiat currencies or assets.

3 Ways Tether’s New Dirham-backed Stablecoin Could Impact the Crypto Market

Historical trends in the cryptocurrency market suggest that the introduction of a new stablecoin often leads to spike in trading activity. Here are three potential ways Tether’s introduction of a Dirham-backed stablecoin in the UAE/Dubai markets could influence the broader cryptocurrency sector.

1. Enhancing Crypto Adoption in the Middle East

The Middle East, particularly the UAE, has seen a surge in cryptocurrency adoption. A recent Bitget Research report highlighted a 166% year-over-year increase in the average daily number of crypto traders in the region, which reached 500,000 in 2024.

This growth is driven by favorable regulatory frameworks, the approval of Bitcoin ETFs, and a bullish sentiment in the cryptocurrency market. The UAE leads the region, with 72% of crypto users actively investing in Bitcoin.

Centralized crypto exchanges globally have reported a significant increase in users from the Middle East. According to Bitget Research, these exchanges recorded over 500,000 daily active users on average in February 2024, up from the previous year. The UAE’s crypto-friendly policies and the approval of spot Bitcoin ETFs have played a crucial role in this adoption.

The launch of Tether’s Dirham-pegged stablecoin could attract increased institutional interest in Middle Eastern crypto markets. Institutions seeking to capitalize on the region’s growing crypto adoption may view the stablecoin as a gateway to participate in the UAE’s burgeoning digital economy.

Historically, institutional involvement has been a catalyst for significant price movements in major cryptocurrencies. For instance, Bitcoin price surged to an all-time high of $72,000 in April 2024, following increased institutional investment through the newly-launched BTC spot ETFs in the US.

A similar trend could emerge as institutions adopt the new Dirham-pegged stablecoin, potentially driving up demand for Bitcoin and Ethereum as hedging instruments.

Moreover, the introduction of a Dirham-pegged stablecoin could boost liquidity in the UAE’s crypto markets, making it easier for institutions to enter and exit positions.

2. Historical Trends Suggest a Bullish Outlook for Global Crypto Markets

Tether’s new Dirham-pegged stablecoin could also have a significant impact on the adoption of Bitcoin and Ethereum in the UAE. As the stablecoin facilitates seamless transactions in AED, it could lead to an increase in the use of Bitcoin and Ethereum for cross-border payments and remittances.

The introduction of a stablecoin that allows for easy conversion between AED and BTC could increase Bitcoin’s appeal as a safe haven asset in the Middle East. This could lead to an increase in demand for Bitcoin, driving its price higher.

Similarly, Ethereum, known for its smart contract capabilities, could see increased adoption in the UAE as the Dirham-pegged stablecoin becomes integrated into decentralized finance (DeFi) platforms.

Historical trends in the cryptocurrency market suggest that the introduction of a new stablecoin often leads to increased trading activity and higher prices for major cryptocurrencies.

For example, the launch of USDT in 2014 was followed by a significant increase in Bitcoin’s trading volume and price.

The chart above illustrates the relationship between the cumulative market cap of Tether (USDT) and the total cryptocurrency market valuation. Since USDT’s introduction, its market cap has grown significantly, particularly from 2020 onward.

This expansion has been closely correlated with the overall rise in the cryptocurrency market’s valuation, suggesting that USDT has played a crucial role in driving market liquidity, adoption, and capital inflows.

As USDT provided a stable and reliable on-ramp for fiat into crypto, it facilitated increased trading volumes and broader participation in the market. The sharp rises in USDT’s market cap, especially during 2020-2021, align with major bullish trends in the crypto market, highlighting USDT’s impact on driving total market valuation upward.

Moreover, the UAE’s favorable regulatory environment and the growing adoption of cryptocurrencies in the region provide a strong foundation for a bullish outlook. As more users and institutions in the UAE embrace the Dirham-pegged stablecoin, the demand for Bitcoin and Ethereum could increase, leading to higher prices in the long term.

2. Strengthening of the Middle East’s Crypto Hub Status

The launch of Tether’s Dirham-pegged stablecoin is likely to strengthen the UAE’s status as a leading crypto hub in the Middle East. The stablecoin’s introduction aligns with the UAE’s broader strategy to become a global leader in blockchain and digital finance.

The UAE’s government has been proactive in creating a favorable regulatory environment for cryptocurrencies, which has attracted a growing number of crypto businesses and investors to the region. The introduction of a Dirham-pegged stablecoin further cements the UAE’s position as a key player in the global crypto market.

As the UAE continues to attract crypto businesses and investors, the demand for Bitcoin and Ethereum is likely to increase. This could lead to higher prices for both cryptocurrencies as they become more integrated into the UAE’s digital economy.

Tether’s announcement of a Dirham-pegged stablecoin marks a significant development in the global crypto market. The stablecoin’s introduction in the UAE, a region that has seen rapid crypto adoption, could have far-reaching implications for the prices of Bitcoin and Ethereum.

The increased institutional interest, enhanced liquidity, and growing adoption of cryptocurrencies in the Middle East could lead to higher prices for Bitcoin and Ethereum in the long term.

Historical trends suggest that the launch of a new stablecoin often leads to increased trading activity and higher prices for major cryptocurrencies.

As the UAE continues to strengthen its position as a global crypto hub, the demand for Bitcoin and Ethereum is likely to increase, driving bullish sentiment in the market. Tether’s Dirham-pegged stablecoin could play a key role in this trend, providing a gateway for institutions and users in the UAE to participate in the global crypto economy.