Tether printed two billion dollar-backed tokens last week, a new record for the leading stablecoin project.

Over 24.6 billion tethers now circulate across Ethereum, Tron and Bitcoin’s Omni Layer, per data from Coin Metrics, up from 4.8 billion one year ago. 

The growth comes from a variety of factors, said Sam Trabucco, quantitative trader at Alameda Research. “Some [people] don’t put trust in their local banks or currencies,” he said, in which case using USDT is the “most liquid USD-like exposure the market has access to.” 

Growth also comes when traders start to “aggressively sell BTC into USDT” or vice versa, Trabucco noted, which can cause the dollar-pegged token to temporarily trade above or below its peg.

For nearly all of January so far, USDT has traded slightly above $1 until early Monday morning when it dropped below the mark, per market data from U.S.-based cryptocurrency exchange Kraken. 

Per Tether and Bitfinex CTO Paolo Ardoino, new deep-pocketed institutional bitcoin investors like MicroStrategy or Ruffer Invest executing over-the-counter (OTC) buy orders has also cause significant USDT supply growth.

“Among Tether customers are all the major OTC desks and high frequency trading firms in the space,” Ardoino told CoinDesk in a direct message. Taking the buyer’s funds, OTC desks will routinely convert to USDT and spread the buying pressure across all possible liquid venues, creating demand for more stablecoins. 

Trabucco also noted “heightened volumes” across all cryptocurrency trading venues over the past few weeks combined with “the ability to use USDT as collateral for an increasing number of derivatives products” as additional reasons for tether’s substantial supply growth. 

Notably, trading volumes for markets quoted in USDT continue to surpass bitcoin-quoted pairs, which used to be where most trading volume concentrated. 

For Tether, all of these combined market dynamics “have led to an increase in creation”, Trabucco said.

Concurrent with its meteoric supply growth, increased attention has been paid to questions about Tether’s backing, an issue that is even the subject of an inquiry by the New York State Attorney General’s office. 

Per prior court statements, Tether reserves include cash, short-term reserves and other cryptocurrencies. But no bank statements or legal documents supporting this claim have been published since 2018, when Bahamas-based Deltec Bank published an unsigned letter affirming that Tether held $1.8 billion in reserves, matching the amount of USDT issued at the time.

In April 2019, Tether’s supply was only about 74% backed by fiat equivalents, per a statement from its general counsel. But, reiterating a later statement made in November 2019, Ardoino took to Twitter on New Year’s Eve saying, “Tether is fully backed, full stop.”