USDT’s market cap drops for the first time in 2023
Tether Holding’s USDT market cap has declined for the first time in almost a year, signaling a potential shift in the stablecoin landscape. This comes as reports indicate that USDT has been consistently depegging versus the USD throughout August.
In the first week of August, USDT had a 98% depeg severity, meaning the stablecoin was sold at a discount on almost every platform. By the end of the month, its market cap had contracted by 1.2% to $82.9 billion, according to CCData, an analytics platform.
Stablecoin’s aggregate market has shrunk for the 17th consecutive month, currently hovering around $125 billion.
Factors inducing this slump include diminishing trading volumes, which is further impacted by soaring interest rates, regulatory clampdowns, and waning investor attraction.
Yet, amidst this, USDT has been standing unchallenged as the most liquid stablecoin.
However, there are still significant worries concerning the sustainability of stablecoins, more so after Binance recently announced halting their support on BUSD.
The stablecoin, trading under Binance’s brand, is losing market cap as more users redeem. This ongoing decrease is predominantly attributed to regulatory actions taken by U.S. authorities over the past few months.
Meanwhile, Circle’s USDC has seen its market dominance decrease by half in the past year due to earlier depegging after Silicon Valley Bank (SVB), which serves as the issuer’s reserve custodian, collapsed in March 2023.
By end of August 2023, USDC’s market capitalization hovered at around $26 billion and remained the second largest stablecoin.
Amid this, interest in First Digital Group’s FDUSD stablecoin is on the rise, possibly due to promotional incentives aimed at Binance users. This strategic development coincides with Binance facing legal challenges from various regulatory authorities, particularly from the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). The two agencies have filed lawsuits against Binance.
Credit: Source link
