The stablecoin market is still dominated by Tether (USDT) as it remains the go-to choice for traders and investors. This preference is due to its status as the largest digital asset pegged to the US dollar, with its market cap reaching an all-time high of $87.48 billion this week. On the other hand, USDC, the stablecoin issued by Circle, has struggled to gain momentum in 2023.
Tether’s Position
Despite facing scrutiny over its reserves, USDT remains the third-largest digital asset globally, closely trailing behind Bitcoin and Ether. Despite various scandals and a downturn in the cryptocurrency market over the past year, USDT has seen its market cap increase by $22 billion. In contrast, USDC has experienced a significant decline of $21 billion in its market cap over the same period.
Market Capitalization
USDC’s market capitalization peaked at $55 billion in June 2022 but has steadily decreased since then. As of January 2023, its market cap stands at $24 billion. Meanwhile, Tether’s market cap has grown from roughly $66 billion at the beginning of the year to over $87 billion currently, representing a 32% year-to-date surge.
Tether’s Growth Drivers
Tether’s growth has been fueled by increasing demand in emerging and developing markets. In Brazil, for example, USDT accounted for 80% of all cryptocurrency transactions. Additionally, institutional investors’ growing interest in Bitcoin and anticipation of a potential Bitcoin ETF have contributed to Tether’s expansion.
Increased Activity
According to blockchain intelligence platform Santiment, there has been a notable increase in USDT transactions exceeding $100,000 on a weekly basis. This level of activity has not been seen since March and indicates a resurgence in the crypto market.
Hot Take: The Future of Stablecoins
The battle for stablecoin supremacy continues between Tether and USDC. Tether’s growth shows no signs of slowing down, driven by demand in emerging markets and institutional investor interest in Bitcoin. On the other hand, USDC faces challenges in gaining momentum. This trend reflects an ongoing preference for Tether as the leading stablecoin in the market.
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