Tether dominance is still increasing- The Cryptonomist

Tether’s USDT has always been the leading stablecoin in crypto markets.

In 2022, however, the implosion of the algorithmic stablecoin UST had put fears into circulation that also concerned Tether’s resilience. And so its market capitalization declined, due to many USDT returns.

USDT’s dominance.

According to CoinGecko data, as of April last year, Tether’s dominance in the stablecoin market was about 50 percent.

After rising to nearly 52 percent in the first decade of May, with the implosion of UST, it plummeted to 47 percent within days.

The following month, after the Celsius bankruptcy, it plummeted again to 44%, which is a level it probably never had before.

Although it managed to regain 48% of the total stablecoin market cap in November, it plummeted back below 47% with the FTX bankruptcy.

What is surprising, however, is what happened next.

Tether recovery

In fact, by January 2023 it had already recovered 50 percent, and in February it even returned to 52 percent. But the really curious thing is that it has continued to grow, reaching 54.5 percent yesterday.

Not only is this level higher than it was before the implosion of UST, but it is also the highest level in 15 months.

Perhaps it is precisely because UST is now missing that USDT has managed to achieve a higher level of dominance even than it had before its implosion.

Note that its two main rivals, USDC and BUSD, have recently taken the opposite path instead.

USDC in April 2022 was at 30 percent, sputtering to 37 percent in June. For the rest of 2022, however, it fell back to 30 percent and then started 2023 at 32 percent. It should be mentioned, however, that in these early months of the new year, it first dropped to 31%, and then rose again to 33%.

The most glaring trend, however, is that of BUSD, which is continuing to lose market capitalization.

Its dominance as of April 2022 was 10%, but during 2022 it had sprung as high as 16.5% with the collapse of FTX. Although it seemed to be on the upswing at that point, trouble began in 2023, so much so that it started the year at 12 percent, then plummeted to 6 percent as of mid-February.

Tether’s dominance and market cap

Therefore if in 2022 Tether’s dominance was challenged first by USDC and then by BUSD, things changed dramatically in 2023.

UST disappeared last year due to the loss of the peg with the dollar, while BUSD is almost disappearing due to the freeze on the issuance of new tokens and the return of most of those already issued.

This dynamic is also being taken advantage of by USDC (USD Coin), which has risen back to 33 percent dominance after having fallen last year even as low as below 30 percent, but it is being taken advantage of especially by USDT, which from this point of view has touched its highs since 2021.

The discussion, however, changes somewhat if instead of dominance one analyzes market capitalization.

Because Tether dominance is at its highest in recent times due mainly to the collapse of two of its rivals.

USDT’s current market capitalization is nearly $72 billion, while in early May 2022, it had even reached over $83 billion.

USDC right now, on the other hand, capitalizes more than 43 billion, but at the beginning of May 2022, it capitalized 49 billion. BUSD, on the other hand, has plummeted to 8 billion, down from 17 billion in May 2022.

In total, including  Tether USDT, last year before its collapse the five major stablecoins capitalized more than $175 billion, while now they have fallen below $135 billion.

So USDT has not gained capitalization in the past twelve months, but it has gained dominance due to the collapse of two of its main rivals.

Tether’s resilience

Many say they are amazed by USDT’s resilience.

Last year, when UST imploded, many argued that Tether USDT was also in danger of something similar. But while UST was an algorithmic stablecoin, USDT is a stablecoin that is 100 percent collateralized in the underlying, so it is much harder for it to have serious problems.

What is even more surprising, however, is that it ultimately held up better than all the others, so much so that its main rival, USDC, currently has dominance that is only slightly higher than it was in April 2022, and even lower than it was in late May.

It is therefore no coincidence that criticism of Tether has smoothed out quite a bit lately.