USDT’s rising dominance has been reshaping the stablecoin sector, with its trading volume hitting a staggering 77% on Binance, a peak not witnessed since April 2022. This surge in dominance can be attributed to several factors, including the decline of UST and the growth of fiat-backed stablecoins.
USDT’s Market Share Expansion
In the competitive landscape of stablecoins, Tether (USDT) has been rising above its counterparts. As per data from Kaiko, USDT’s trade volume on Binance reached an all-time high of 77% last week. This significant shift was triggered by Binance’s decision to reintroduce taker fees for its TrueUSD (TUSD) trading pairs, leading to a drop in TUSD’s trade volume.
However, USDT’s supremacy didn’t occur overnight. It was driven by multiple contributing factors, key among them being the fall of Terra USD (UST). Data from Galaxy Research revealed that since UST’s collapse in mid-2022, the market capitalization share of algorithmic stablecoins plummeted from 12.56% ($23.5 billion) to a mere 1.5% ($1.9 billion).
Role of Fiat-Backed Stablecoins in USDT’s Rise
Fiat-backed stablecoins have played a significant role in strengthening USDT’s position. Today, USDT is predominantly used as an on- and off-ramp in cryptocurrency transactions across various exchanges. It facilitates the conversion of traditional currency into cryptocurrency and vice versa, serving as a gateway to the crypto world.
At the time of writing, USDT ranks third among all cryptocurrencies, trailing only Bitcoin (BTC) and Ethereum (ETH), with a market capitalization exceeding $70 billion. It is accessible on 12 blockchains, including Tron, Solana, Avalanche, among others.
USDT’s Noteworthy Presence on the Tron Network
Among these networks, USDT’s presence on the Tron (TRX) blockchain stands out. Despite Tron’s perceived lack of security, USDT, being a centralized asset, remained largely unaffected by these limitations. It capitalized on Tron’s swift block times and lower fees due to less network congestion compared to Bitcoin or Ethereum.
USDT serves multiple purposes, from enabling entry into the crypto space, acting as a quote currency for spot and derivatives trading, facilitating cross-exchange arbitrage, to easing international dollar-denominated transfers. Currently, USDT boasts the highest market capitalization among stablecoins, surpassing rivals like USD Coin (USDC), Binance USD (BUSD), and DAI.
Monitoring the ever-changing dynamics of the stablecoin market, including USDT’s rising dominance, becomes simpler with tools like cryptoview.io. This application offers a comprehensive view of the crypto market, allowing users to stay updated with the latest trends and shifts.
USDC’s Ongoing Battle
Despite USDT’s growing market cap, it hasn’t been able to monopolize the market in terms of overall transaction volume. Data from Dune Analytics revealed that USDC accounted for 47.9% of all transaction volume on all networks, indicating that USDC still holds a significant presence despite its declining market share.
The drop in USDC’s market cap can partly be attributed to the fall of Silicon Valley Bank (SVB), which held some of Circle’s reserves, the issuer of USDC. This incident sparked considerable fear and uncertainty around the stablecoin. Even though USDC showed resilience amidst SVB’s collapse, it has been losing market cap over the past few months. Its network growth has also slowed down, suggesting a decrease in interest in new addresses in the stablecoin. However, the number of USDC holders continues to rise significantly during this period.
