USDT stablecoin market dominance increases as USDC declines due to global economic troubles

The trend among global policymakers to print money out of thin air, resulting in increased overall inflation, has led to a rise in the use of digital assets in recent times. This is evident in the significant increase in Bitcoin prices, fueled by economic difficulties including the global banking crisis. According to the latest price reports from TradingView and Coingecko, Bitcoin prices have risen as much as 69% this year, during early trading in the Asian markets on Monday.

Despite the overall decline in crypto trading volume and liquidity, institutional investors have entered the cryptocurrency market through decentralized financial ecosystems (DeFi). However, due to the high rate of crypto volatility, the stablecoin market has gained a lot of traction in recent times.

Tether (USDT) Dominates the Stablecoin Market

Although Tether has transparency issues compared to its largest competitor, Circle USDC, it has significantly gained more users in the recent past. Tether USDT has managed to remain largely pegged to the United States dollar despite economic downturns. Tether USDT recently announced that it will regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin as a reserve currency.

As a result, the company announced that it held about $1.5 billion worth of Bitcoin in its reserves at the end of March. Ultimately, this move benefits both Bitcoin as it will have more liquidity, and the company as it benefits from BTC’s long-term bullish prospects.

Tether has been gaining notable traction against its market competitors, as seen in its dominance. Already available on 409 crypto exchanges and many more payment platforms and DeFi protocols, USDT is highly liquid compared to most digital assets.

According to aggregate data provided by CoinGecko, Tether USDT had a market dominance of about 66% compared to USDC at 23%. With the total stablecoin market capitalization at about $128.612 billion, tether USDT had a valuation of approximately $83.13 billion. Circle USDC, on the other hand, had a market capitalization of approximately $29 billion and a 24-hour trading volume of about $3.2 billion.

The rise of Tether USDT was significantly cemented after US financial regulators stated that Binance-backed BUSD is an unregistered security. The Paxos-issued stablecoins have seen their market share significantly decline to about 4.18% after the company was forced to cease further minting of BUSD.

Favorable Conditions

The United States dollar remains the most used reserve currency around the world despite the rise of the BRICS organization led by Russia and China. With inflation on the rise among most countries, the use of Tether USDT has increased exponentially in the past year. Moreover, the digital economy has significantly increased with the rise of the cryptocurrency market.

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