The latest market data revolving around stablecoins has started gaining a lot of market attention lately. However, the report specifically talks about Tether (USDT).
Tether Market Grew in Demand
The data shows that the market capitalization of USDT has surged at a substantial rate in the latest trading sessions.
The most interesting thing is that the value of USDT has surged while the rest of the major stablecoins lost their dollar pegs due to the recent events.
Just a week back, the US regulators went berserk against the major crypto-pro banks. This led to a great void in the entire crypto industry because most of the crypto firms had their funds stored at particular banking institutions.
As a result, platforms such as Circle and MakerDAO ended up facing huge problems pertaining to their reserves. It was revealed that these firms had their funds reserves at the (SVB and Signature) banks.
With the funds being stuck, a great void was witnessed causing the stablecoins of both platforms to get de-pegged.
Circle is known for being the company behind the issuance of USDC Coin (USDC). While MakerDAO is behind the issuance of DAI.
Due to the banking turmoil, the stablecoins lost their dollar pegs. With two major stablecoins losing their dollar pegs, the investors had no choice but to flock to the major stablecoin that was resilient to the market turmoil.
Although it is claimed that the USDT is not fully backed by collateral reserves, it still ended up becoming the top choice among investors.
Even though the decline in the trading prices of the stablecoins was for a brief moment, it ended up bringing in a huge influx of USDT.
Another major stablecoin, Binance USD (BUSD), ended up facing a huge decline because Paxos, the company behind the token’s issuance announced the discontinuation of their services.
Paxos came under the regulatory scrutiny of the US SEC in late February. The regulator claim Paxos was involved in the issuance of BUSD with regulatory approval.
With major stablecoins going down, many investors flocked to USDT, resulting in a major pump in the token’s market capitalization.
The surge in USDT’s Market Capitalization
The latest market data shows that the market capitalization of USDT has been significant in the ongoing year. According to the stats, Tether’s market capitalization is currently at a high of $73 billion.
So far, the market valuation of USDT has surged by 10% in 2023. With the surge, USDT has gotten twice as big as the valuation of USDC. USD Coin is the second-largest stablecoin in the crypto market by valuation.
The valuation of USDC has plummeted by 11% in the year 2023 and it is currently down to $39 billion.
On the other hand, BUSD, the third-largest stablecoin lost half of its valuation in the same year. At the moment, BUSD’s overall market valuation is at $8 billion but before the banning of Paxos, it was at around $16 billion.
Circle is Still Struggling
Despite the recent boost, market analysts have hinted at more surges in the valuation of USDT. According to the analysts, USDC may still be in trouble following the collapse of the Silicon Valley Bank.
The SVB had $3.3 billion worth of reserves belonging to Circle, backing the USDC. With the SVB being shut down, the funds were stuck the particular.
Although the FDIC has announced that all of the funds will be returned to the depositors, they are yet to make it back to Circle.
Circle has also made claims that it has plans in place that would cover the downfall. However, the market is still in doubt about the future of the company.
This means that the investors may still go for other stablecoins. Given the current circumstances, USDT is proving to be the best choice compared to other tokens.
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