Tuesday, 26 September 2023

Crypto News

Tether supply hits $80B for the first time since May 2022 — stablecoin rivals stumble

Tether supply hits $80B for the first time since May 2022 — stablecoin rivals stumble

Tether (USDT) continues to benefit from the ongoing turmoil in the U.S. dollar-backed stablecoin industry with its market capitalization growing significantly in Q1 2023 at other stablecoins’ expense.

Tether market cap reaches $80 billion

On April 6, the circulating market cap of USDT surpassed $80 billion for the first time since May 2022 with a gain of $15 billion so far in 2023.

USDT circulating market cap 12-month performance. Source: Messari

On the other hand, the market caps of its chief rivals, namely USD Coin (USDC) and Binance USD (BUSD), fell by about $12 billion and $9.4 billion, respectively.

USDC and BUSD circulating market cap year-to-date performance. Source: Messari

Tether benefits from non-U.S. status

Crypto traders opted for Tether given the growing concerns around USD Coin and Binance USD.

Notably, USDC market capitalization slipped due to its $3.3 billion exposure to the now-collapsed Silicon Valley and Silvergate banks. While BUSD suffered after New York regulators ordered Paxos to shut down the stablecon’s issuance.

USDC weathered the crisis after the Federal Deposit Insurance Corporation’s assurance that they would make depositors at the insolvent banks whole. As a result, the stablecoin recovered its dollar peg after losing it at the peak of the banking crisis in mid March. 

USDC price performance YTD. Source: Messari

But a growing crypto crackdown in the U.S. has prompted investors to maintain distance from regional firms. For instance, Paxos confirmed that the Securities and Exchange Commission (SEC) treats BUSD as an unregistered security.

On the other hand, Tether is a non-U.S. firm and has repeatedly assured that it has no exposure to insolvent U.S. banks. Nonetheless, it keeps facing constant scrutiny over its reserve assets and lack of proper audits for years, despite such issues becoming less of a concern among traders.

USDT supply drops across exchanges

Interestingly, the growth in the USDT circulating supply has coincided with a drop in its supply across exchanges.

Related: USDT issuer Tether has up to $1.7B in excess reserves, CTO says

Tether’s balance on exchanges has dropped 28% YTD to 12.88 billion USDT, according to Glassnode. In comparison, the aggregated stablecoin balance across exchanges has dropped by 41% YTD to $22.31 billion.

USDT vs. rival stablecoin balances across crypto exchanges. Source: Glassnode

The decline in stablecoin reserves coincides with a crypto market rally, suggesting that traders have been converting…

Click Here to Read the Full Original Article at Cointelegraph.com News…