Tether extends lead in stablecoin race

The USDT stablecoin continues to expand its dominance in the crypto market. With new record highs, Tether sets itself apart from the competition.

The market cap of Tether (USDT) is at a new record high, according to data from Coingecko. At just over $83 billion, USDT is a giant in the crypto sector, leaving other stablecoins far behind. USDT thus developed against the trend. Market dominance in stablecoins currently stands at 66 percent, up from 47 percent last year. The question: is there any competition at all?

Besides USDC and BUSD, all other stablecoins have lost relevance in recent months. Since last year, the market dominance of Circle (Coinbase’s stablecoin) has dropped from 35 percent to now 23 percent. The reason: the loss of the dollar peg in March. The Binance stablecoin did no better. BUSD’s participation fell from 12 to just 4 percent over the past 12 months. Together, the two biggest USDT competitors thus represent "only" $34 billion in market cap. No threat to Tether, then.

A long way to the top

Tether’s alleged success, however, is controversial. In early 2021, the New York State Attorney General’s Office confronted the company behind the stablecoin. The reason: Tether was allegedly speculating on missing reserves. The initiated proceedings hung over the crypto space like a sword of Damocles. The decision, more than a year later in 2022: Tether must disclose its cash reserves for the stablecoin USDT. This result felt like an indictment of the entire crypto sector. Tether’s market capitalization collapsed - in the end, the difference between USDT and USDC was still "only" $10 billion.

But Tether is fighting its way through criticism and the difficult period following the Terra crash. By October, USDT reserves already consist 100 percent of U.S. government bonds. Barely two quarters later, the company announces a new record: according to an audit report, it holds $2.44 billion in excess reserves of its tokens in circulation. Tether is thus becoming a model company, at least if Tether’s CTO is to be taken at his word.

Circle leaves USD field to Tether

Meanwhile, the competition is also working on its image. Circle’s second-largest stablecoin is obviously still very popular. However, confidence in the U.S. government and thus the world’s reserve currency is waning. All the more reason for the stablecoin issuer to focus on its new product: the EUROC. After launching on the Ethereum Blockchain last year, the Euro Stablecoin recently started running on Avalanche.

USDT, USDC or BUSD: stablecoins are unmissable in the crypto market. With the three largest, however, a central player must ensure that the coin’s value remains truly stable.