Tether-Issued Stablecoin USDT’s Market Share Grows to 75% as Market Cap Tops $118B

As a seasoned crypto investor with a keen eye for market trends, I’ve seen my fair share of ups and downs in this wild world of digital assets. Over the past few years, I’ve watched Tether’s USDT grow from a promising stablecoin to a behemoth that now controls over 75% of the market. It’s like watching a giant sequoia sprout in the middle of a prairie and eventually overshadow everything around it.

Tether’s USDT, the leading stablecoin, is not only expanding but also solidifying its leadership role. Currently, it holds nearly 75% of the total value in the stablecoin market, an increase from 55% two years ago, as per data from blockchain analytics platform Token Terminal.

Stablecoins, cryptocurrencies whose price is meant to be pegged to a real-world asset such as a national currency or gold, are key pieces of plumbing for the crypto market, serving as a bridge between fiat money and digital assets. They are increasingly popular for non-crypto activities in emerging regions like Latin America and Southeast Asia, with uses ranging from saving in dollars, payments and cross-border transactions, a fresh report by venture capital firm Castle Island and hedge fund Brevan Howard Digital said.

In the second quarter of 2024, Tether, a New York-based global financial services company, manages approximately $97 billion worth of U.S. Treasuries and repurchase agreements as reserves. This position generates around $400 million in monthly revenue, according to Token Terminal’s estimates, from the yields on these assets.

Users of USDT often choose this digital token because of its powerful network effects, high user confidence, deep liquidity, and strong reputation compared to other stablecoins, according to a survey mentioned in the report.

It’s also been helped by competitors’ woes.

As an analyst, I experienced a significant blow to USDC when one of its reserve partners, Silicon Valley Bank, collapsed during the U.S. regional banking crisis in March 2023. Despite swift recovery in price parity, this incident prompted investors to seek alternatives, primarily USDT. Over the subsequent two years, the token’s market cap has diminished from $50 billion to a current level of $35 billion.

In the first quarter of 2023, I found myself dealing with an unexpected turn of events as the Binance-branded BUSD, issued by U.S. fintech firm Paxos, was directed to cease operations by New York state regulators. At its zenith in late 2022, this stablecoin held the third-largest market capitalization, towering above $20 billion.

Recently, new contenders have appeared on the scene, for example, PayPal’s digital currency PYUSD, as well as decentralized options like Aave and Curve from blockchain applications. However, these new entrants have yet to displace centralized leaders such as Tether and Circle in terms of dominance.