Stablecoins like Tether (USDT) and USD Coin (USDC) are usually steadier than other digital assets, especially those pegged to fiat currencies like the USD.
These coins act as a hedge against extreme levels of market volatility. However, the latest data on USD-pegged stablecoin’s reactions to the current economic uncertainty displays unexpected outcomes.
However, these assets have seen a lot of action over the past few months. While many stablecoins are losing market share, the top stablecoin by market cap, Tether USDT, has climbed to an all-time high over the past year.
Tether (USDT) Takes Over
According to data from Coingecko, Tether has gained market dominance in the past 12 months. The stablecoin currently holds a whopping 65.89% market dominance, far ahead of others in its category. Data shows that USDT added 18.85% to its market dominance of 47.04% one year ago.
Regarding its market cap, USDT currently stands at $3.1 billion. Also, the coin’s 30-day circulation metric grew by 1.7%, higher than many others. On the other hand, the second largest stablecoin by market cap, USDC, shows declining market dominance.
USDC lost 11.83% from its former dominance of 34.88% in May 2022 to sit at 23.05% 12 months later.
The overall market capitalization of USDC has decreased significantly to $29 billion from its previous peak of $55 billion. According to the 30-day circulation data, there has been a 4.9% drop in the coin’s circulation. Similarly, Binance USD (BUSD) has also experienced a significant decline of 6.87% in the past year.
The stablecoin stood at 11.68% one year ago, but its market dominance now stands at 4.18%. As of the time of writing, BUSD 30 day’s market circulation shows a decline of 15%.
Circle’s CEO Cites Regulatory Clamp Down As The Cause For The Decline In USDC
According to a Bloomberg report on April 26, the company behind Tether’s competitor, Circle, and its CEO Jeremy Allaire stated that the United States banking crisis and regulatory crackdown are the reasons for USDC’s decline.
The CEO further claims that the industry is seeing a “concerning” hostility in U.S. crypto regulatory environment, implying that the uncertain regulations about crypto in the US are discouraging investors from allocating money to the nascent asset class.
Tether USDC de-pegged from the United States dollars during the U.S. banking crisis, when prominent financial institutions, including Silvergate and Silicon Valley Bank, collapsed. Circle had a whopping $3.3 billion reserves in Silicon Valley Bank (SVB).
During the crisis, the company attempted to withdraw the funds but failed. After revealing this issue, many investors moved their funds from USDC to USDT, causing the former to de-pegged from the U.S. dollar.
Featured image from Pixaby and chart from Tradingview