Tether Market Cap Increases 10% After Stablecoin Merger – Can It Hold Its Lead?

The market capitalization of popular stablecoin tether (USDT) rose as other stablecoins including Circle USD coin (USDC) and MakerDAO’s DAI briefly lost their pegs over the weekend.

Due to the increase in market share of tether, Binance USD (BUSD), a stablecoin issued by the American company Paxos Trust Company for Binance, USD coin and other major stablecoins have seen their share of the stablecoin market decline .

So far in 2023, BUSD has lost nearly half of its market capitalization to around $8 billion, while USDC has fallen 11% to $39 billion.

Tether’s market capitalization, on the other hand, has increased by 10% this year to $73 billion, making it almost twice as large as USDC, the second-largest stablecoin in the market.

The latest increase in Tether’s market capitalization comes after its main competitor, the USDC, lost its peg over the weekend. The undocking came when news broke that Circle, the company that issues USDC, had $3.3 billion of $40 billion in USDC reserves on deposit at Silicon Valley Bank (SVB). ).

SVB collapsed on March 10, but the US government then came to the rescue and guaranteed that all depositors would regain access to their money. The government bailout effectively saved the USDC, which then returned to its fixed price of $1.

“A lot of sales pressure”

Commenting on the situation to The Wall Street Journal on Tuesday, Kevin March, co-founder of trading firm Floating Point Group, said his firm was among many market participants that moved funds from USDC to USDT when the undocking has occurred.

“Many of our clients have opted to do the same, putting strong selling pressure on the USDC-USDT trading pair,” March said.

Interestingly, it could be tether’s status as one of the least regulated and, according to some, the least transparent stablecoins that is now working in its favor.

“It’s a validation of what we know about money and things that try to be money, which is that when you provide too much information, you’re likely to leak” , said Steven Kelly, a researcher at Yale University’s Financial Stability Program. Street Journal, before finally adding:

“We knew Circle was exposed to SVB, we found out what it was and there was a run. We don’t really know that much about the tether, and it just seems safer for that reason alone.