Tether Surges to 57.8% Dominance in Stablecoin Market15. March 2023
• Tether’s (USDT) dominance in the cryptocurrency market has surged to 57.8%.
• This increase is due to a regulatory crackdown on Binance USD (BUSD) and the recent chaos surrounding USD Coin (USDC).
• A chart from Glassnode shows the change in dominance of different stablecoins since January 2020.
Tether’s Dominance Surges
Data shows that Tether USD (USDT) has benefited from the recent chaos with the USD Coin (USDC) peg, as the stablecoin’s dominance has now hit 57.8%.
The “dominance” here is an indicator that measures what percentage of the total stablecoin supply is made up of any given token. When this metric rises for a coin, it means investors are possibly rotating into it from other stables right now. This trend shows an increased preference for a given stablecoin in the market.
Change in Dominance Since January 2020
A chart from Glassnode shows that Tether had been facing a structural decline since mid-2020 until recently, when its share of supply started increasing again:
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Events Fueling Rise In Dominance
Two main events have fueled Tether’s rise in dominance: firstly, there was a regulatory crackdown on Binance USD which caused Paxos – issuer of BUSD – to agree to stop minting more tokens; and secondly there was chaos surrounding USDC where it briefly lost its $1 peg due to fears that it had become partially unbacked because of SVB debacle. As seen from the chart above, while USDC’s dominance hasn’t changed drastically yet (remaining within 30-33%), BUSD’s share dropped sharply from 16% back in November 2022 to 6.75% today.
In conclusion, these two events have led to an increase in Tether’s dominance over other stablecoins as investors rotate into it instead during this time of uncertainty and chaos.