Stablecoin provider Tether recently generated $1 billion worth of USDT tokens on the Ethereum blockchain, seizing the opportunity presented by a market surge driven by optimism surrounding the potential approval of a spot ETH ETF by the US Securities and Exchange Commission (SEC) this week.

Initially reported by Whale Alert, the minting was later confirmed by Tether CEO Paolo Ardoino, who explained that this action was an authorized but not issued transaction, indicating that the tokens would serve as inventory for future issuance requests and chain swaps.

Market analysts view Tether's move as a strategic preparation for a potential market upswing following news of an ETH ETF approval. Ivan Sherbakov, CEO of Cryptorobotics, suggested that this influx of liquidity could fuel a market rally in anticipation of the ETF announcement.

Historical data suggests a correlation between the expansion of USDT supply and a broader positive trend in the crypto market, leading to increased trading volumes and a more dynamic environment for digital assets.

Tether typically replenishes its inventory by generating new USDT tokens in anticipation of heightened demand. These tokens, kept in Tether's treasury, are categorized as "authorized but not issued," meaning they are not yet in circulation or factored into USDT's current total market capitalization.

According to Tether's Transparency page, there were $87.8 million worth of such USDT tokens on Ethereum as of May 21. Over the past year, Tether's market capitalization has experienced significant growth, exceeding $110 billion and commanding approximately 70% of the market, according to CryptoSlate's data.

This growth can be attributed to various factors, including the successful introduction of spot Bitcoin ETFs in the US. Additionally, Tether has ventured into other sectors beyond its flagship USDT stablecoin, such as Bitcoin mining, contributing to its expansion and diversification efforts.