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The new implementation of MiCA in the European Union led to a major change in the cryptocurrency market, resulting in a drop of $ 2 billion in the market value of Tether in USDT.
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Despite the initial panic, industry analysts consider this period a strategic buying opportunity, arguing that concerns about Tether’s stability may be exaggerated.
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To prepare for MiCA, Tether has strategically suspended its EURT stablecoin, while continuing its operations in Asia and focusing on maintaining strong trading volumes there.
This article explores the impact of the MiCA regulation on Tether market value, comparing current concerns with expert opinions and implications for investment strategies.
Tether’s USDT reacts to the MiCA Act
The Crypto Asset Market Regulation (MiCA), which entered into force in the European Union on December 30, has increased concerns about the future of Tether, especially the market value of USDT which has experienced a significant drop of $ 2 billion. This drastic decline is similar to the FTX crash, especially in late 2022; At that time, the price of USDT fell by more than 5%.
The effects of MiCA are carefully monitored; Famous figures from the world of crypto analysis, such as Michaël van de Poppe, express concern about a possible market decline. Van de Poppe has dampened expectations of a bear market among some investors, saying “the market could collapse.”
USDT market exchange for the last week. Source: TradingView
MiCA presents significant challenges to Tether; Especially due to new regulations, it has become mandatory for various exchanges to liquidate USDT. Since mid-December, Coinbase has started to limit USDT trading; This is a clear indication that the regulatory landscape is changing.
Meanwhile, Tether’s leading rival Circle’s USDC benefited from these regulatory changes, gaining more than $1 billion in market value the day MiCA went into effect. However, Axel Bitblaze changed this negative view, saying, “There is a lot of misinformation being spread that USDT is considered illegal in the EU.” Bitblaze emphasized that although uncertainty still exists, 80% of USDT trade comes from Asia, which will reduce the impact of EU restrictions.
Bitblaze suggested that the current climate of fear, uncertainty and doubt (FUD) around USDT creates profitable buying opportunities for cautious investors. In addition, Paolo Ardoino, the CEO of Tether, agreed with this sentiment and called on the public not to believe the horror stories spreading in the market: “Don’t believe FUD. The opposition is desperately trying to believe in things that don’t exist. “
In preparation for the MiCA regulations, Tether decided to stop operating its EURT stablecoin in November; This happened due to concerns about compatibility. However, Tether is committed to adapting to the changing regulatory landscape by investing in more stable opportunities within the EU.
Crypto lawyer Jonathan Galea provided further insight, saying, “USDt is not the only stable currency that is not publicly available in the Union,” stressing that the implementation of MiCA will not make USDT illegal. Galea said that a too strict interpretation of the rules could seriously limit the flow of the EU market.
Although MiCA presents operational challenges, it is important to note that market activity in Asia continues to effectively drive USDT operations. While the pressure to comply with MiCA raises questions about Tether’s long-term strategy, the company’s global presence can mitigate any negative effects of regional restrictions.
Conclusion
All in all, the entry of MiCA has created a dramatic change for Tether’s USDT and a significant drop in market value has been seen. Despite the current fear, industry analysts recommend taking a measured approach; They argue that the negative effects may not be as severe as expected. As Tether continues to dominate the Asian trading market as it becomes compliant, investors are also evaluating the risks and opportunities presented by this regulatory environment.
