Tether’s price rose above $1.004

Tether (USDT), the oldest and most popular stablecoin, diverged significantly from its peg to the U.S. dollar during bitcoins (BTC) recent price drop.

But rather than seeing the move as a defect of the stablecoin, whose market cap stands at $52 billion, some analysts and exchange executives say the “tether premium” shows the tokens growing use as a safe-haven asset in almost-anything-can-happen-at-anytime cryptocurrency markets.

“During a crash, traders will race to sell their bitcoin in exchange for tether, which is similar to the U.S. dollar in that it is recognized as a temporary safe haven amidst extreme price volatility,” Kaiko, a blockchain data analytics firm, wrote in an April 19 newsletter. “A sudden increase in buying pressure for tether often has the effect of causing positive drift from the stablecoins one-to-one peg.”

Yet tether‘s market value has more than doubled from about $20 billion at the start of the year, a sign of traders’ growing embrace of the stablecoins convenience and efficiency as the de facto form of cash in cryptocurrency markets.

Tether‘s price rose above $1.004 as bitcoin started falling early Sunday. That was tether’s highest level since March 2020, when the likely economic damaged from the coronavirus and related documents first became apparent, triggering a sell-off in a broad range of assets from stocks to cryptocurrencies.

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