Bitrabo Editorial
Compared to other digital assets, stablecoins like Tether (USDT) and USD Coin (USDC) are generally less volatile, especially those pegged to fiat currencies like the USD. These coins provide a hedge against extreme market volatility. But the latest data on USD-pegged stablecoin’s reaction to the current economic uncertainty reveals unexpected results.
Several stablecoins have been losing market share, while the top-ranked Tether USDT has reached a new all-time high over the past year. According to data from Coingecko, Tether has gained market dominance in the past 12 months, currently holding a remarkable 65.89% market share, far ahead of others in its category.
Tether (USDT) Dominates the Market
USDT’s market dominance increased from 47.04% a year ago to its current market share of 65.89%. Data also shows that Tether added 18.85% to its market dominance of one year ago. Regarding its market cap, USDT currently stands at $3.1 billion, while its 30-day circulation metric has grown by 1.7%, higher than many other stablecoins.
However, the second-largest stablecoin by market cap, USDC, shows declining market dominance. USDC lost 11.83% from its previous market dominance of 34.88% in May 2022, to sit at 23.05% 12 months later. USDC’s overall market capitalization has significantly decreased to $29 billion from its peak of $55 billion.
According to the 30-day circulation data, there has been a 4.9% drop in USDC’s circulation. Similarly, Binance USD (BUSD) also experienced a significant decline of 6.87% in the past year. BUSD’s market dominance stood at 11.68% one year ago, but now, it stands at 4.18%. As of writing, BUSD 30-day market circulation shows a decline of 15%.
USDC Declines due to Regulatory Clampdown
A Bloomberg report on April 26 revealed that the company behind USDC, Circle, and its CEO, Jeremy Allaire, attributed the decline in USDC’s market dominance to the economic crisis and regulatory crackdown in the United States. The CEO further stated that the crypto regulatory environment in the US was becoming hostile and “concerning,” discouraging investors from investing in the nascent asset class.
During the US banking crisis, Tether USDC de-pegged from the US dollars when several prominent financial institutions, including Silvergate and Silicon Valley Bank, collapsed. Circle had a $3.3 billion reserve in Silicon Valley Bank (SVB), and during the crisis, the company tried to withdraw the funds but failed. After revealing this issue, many investors moved their funds from USDC to USDT, leading the former to de-peg from the US dollar.
Featured image from Pixaby and chart from Tradingview