Tether supply hits $80B for first time since May 2022 — Stablecoin rivals stumble
However, Tether supply on cryptocurrency exchanges fell by 28% in 2023, suggesting an overall decline in demand for stablecoins.
Tether
Continuing to benefit from the ongoing turmoil in the USD-backed stablecoin industry, its market cap grew significantly in the first quarter of 2023 at the expense of other stablecoins.
Tether’s market cap reaches $80 billion
On April 6, the circulating market value of USDT exceeded US$80 billion for the first time since May 2022, and has increased by US$15 billion so far in 2023.
On the other hand, the market capitalization of its main competitor, namely USD Coin
US Central Bank $1.00 and Binance USD B $1.00 are down approximately $12 billion and $9.4 billion respectively.
Tether benefits from non-US status
Cryptocurrency traders have opted for Tether amid growing concerns over USD Coin and Binance USD.
Notably, USDC’s market cap fell due to its $3.3 billion exposure to the now-defunct Silicon Valley Bank and Silvergate Bank. BUSD suffered a heavy blow after New York regulators ordered Paxos to stop the issuance of stablecoins.
USDC weathered the crisis after the FDIC guaranteed that they would leave depositors of insolvent banks intact. As a result, the stablecoin regained its peg to the U.S. dollar after losing it in mid-March at the height of the banking crisis.
But a growing U.S. crackdown on cryptocurrencies has prompted investors to distance themselves from regional companies. For example, Paxos confirmed that the U.S. Securities and Exchange Commission (SEC) considers BUSD an unregistered security.
Tether, on the other hand, is a non-U.S. company and has repeatedly assured that it is not exposed to insolvent U.S. banks. Still, it has faced continued scrutiny of its reserve assets and a lack of proper audits over the years, although those issues are less of a concern among traders.
USDT supply drops across exchanges
Interestingly, the growth in USDT’s circulating supply has coincided with a decline in exchange supply.
According to Glassnode data, Tether’s balance on exchanges has fallen 28% year-to-date to $12.88 billion. In contrast, the total stablecoin balance across exchanges has fallen 41% year-to-date to $22.31 billion.
The decline in stablecoin reserves coincides with a rally in the crypto market, suggesting traders have been converting their crypto holdings into buying Bitcoin
Bitcoin $28,130 Ethereum $1,875
C3 Tip: The views, thoughts and opinions expressed here are solely those of the author. This article does not contain investment opinions or recommendations. Every investment and transaction involves risk.