Stablecoin Tether’s Market Cap Approaches All-Time High At $83B

Stablecoin Tether’s Market Cap Approaches All-Time High At $83B

Tether (USDT), the biggest stablecoin pegged to the US dollar, is doing exceptionally well in the market despite its instability in mid-2022. Its value has been steadily rising, coming very close to reaching a new record high.

Tether Marketcap
Credits: coingecko

According to Coingecko’s latest data, USDT’s market capitalization has increased by over 20% this year and surged by 12% in the past four weeks alone. As a result of this upward trend, the market cap for USDT is only $3 billion, short of its all-time high of $83 billion achieved in May 2022.

According to Markus Thielen, who leads research and strategy at Matrixport, a crypto services company, the reason for the recent surge in tether’s valuation is due to “aggressive minting and issuance” on Tron Network.

This network is more prevalent in mainland China compared to Ethereum and has a stronger emphasis on money transfer. Matrixport’s data indicates that the Tether issued on Tron is responsible for more than half of the stablecoin’s current market value.

Tether’s market capitalization has been steadily increasing along with the rise in Bitcoin’s price. In contrast, the market capitalization of Circle’s USDC stablecoin, the second-largest dollar-pegged coin in the world, has fallen by 27% to $32.5 billion.

The decrease in demand for USDC started last month after Circle revealed that they held $3.3 billion with failed Silicon Valley Bank (SVB), causing investors to become concerned and flee. Similarly, the market value of Paxos’ centralized, dollar-pegged stablecoin BUSD has dropped by 58% to $7 billion this year.

In February, the New York Department of Financial Services ordered Paxos Trust Company to stop minting BUSD. In response, Paxos stopped creating new tokens while ensuring the redemption process would continue until February 2024.

Matrixport has suggested that some USDC holders may have decided to branch out into Tether or Bitcoin instead. In a note to clients on Thursday, Markus Thielen noted that when news about unlimited support for bank deposits spread, the price of Bitcoin skyrocketed from $20,000 to $28,000 in just a few days.

However, it seems that USDC holders either converted their Circle stablecoin into Tether’s USDT or sold $10 billion worth of USDC and invested in Bitcoin instead.

Also Read: OP Crypto Secures $28 Million In Funding

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