On-chain data shows that investors are withdrawing their funds from Tether (USDT). As a direct consequence of this, the market share held by the stable coin giant has shrunk significantly in the wake of numerous market crashes.
Tether is seeing a decline in its market share:
Tether’s market worth is currently sitting at $68 billion, which is the lowest it has been since October of the previous year. This is a significant drop from its previously achieved all-time high of $83 billion.
Since that time, the value of the stable coin has seen a series of consecutive drops. According to the data provided, it has lost approximately $4 billion in value only since June 14 of this year.
Due to the collapse of TerraUST, market participants have been driven to seek refuge in alternative digital assets that keep a one-to-one linkage with the USD.
As a consequence of this, a market epidemic occurred, which caused crypto assets and stable coins to fluctuate. During this time, USDT momentarily lost its dollar equality and fell to 95 cents.
Although it was able to re-peg in a short amount of time, the fatal spiral caused many investors to abandon the stable coin giant in favor of its competitor, USDC, which is a leading contender.
After conducting additional research, it was discovered that, in contrast to the declining market cap of USDT, Circle’s flagship coin has continued to follow an increasing trend.
The market capitalization of USDC quickly recovered in the middle of May after reaching an all-time high in the first week of March.
It even went on to become the preferred stable coin for use on the Ethereum blockchain, as was mentioned earlier in this paper.
During the same time period, Binance USD (BUSD) also observed a slight but meaningful rebound back up. Tether, USD Coin, and Binance USD are the three largest stable coins that have been able to maintain their positions in the top ten leader board despite the removal of TerraUSD from the competition.
The market capitalization of Tether has been going down in recent days, even though the company has dispelled suspicions that the stable coin is mostly backed by Chinese and Asian commercial paper.
Celsius, the stablecoin issuer, announced in light of recent incidents affecting the crypto lending platform, “Without any losses to Tether, the Celsius position has been liquidated.”
Tether’s lending to Celsius has often been over-collateralized (like with any other borrower). Apart from a little investment made with Tether equity in the company, Tether has really no ongoing exposure to Celsius.
Tether is aware of various allegations circulating that it has a lending exposure to Three Arrows Capital – this is absolutely inaccurate.”
Moreover, Tether’s CTO, Paolo Ardoino, reported an attack on the company’s servers, although confirmed that the attack was unsuccessful.
This morning @Tether_to received a ransom request to avoid mass DDOSes.
They tried already once.
On a normal day we have around 2k reqs/5min
The attack brought us to 8M reqs/5min. pic.twitter.com/rWEan5VNFX
— Paolo Ardoino (@paoloardoino) June 18, 2022
The Economy of Stable Coins:
While it’s possible that other dollar-pegged tokens are eating into Tether’s market share, the overall stable coin supply as a whole experienced a significant decrease during the second quarter of 2022 for the very first time in history (excluding UST).
The head of research and development at CoinMetrics, Lucas Nuzzi, disclosed that there was a significant increase in stable coin redemptions as a result of concerns around short-term liquidity and insolvency.
Tether experienced the highest number of redemptions compared to all other centralized issuers, which wiped out about 7 billion of its supply in the most recent month.
This occurred because investors attempted to exit the market and avoid any additional damage.
Nevertheless, the fast dropping prices of all non-stable coin crypto assets mean that stable coins have gained in terms of market cap and placement.
According to data from only recently, there are currently four of these digital assets among the top 10 largest cryptocurrencies, and a fifth one is getting very close to joining them.