USDT Is The Only Stablecoin Noting Market Cap Growth In February 2023
Stablecoins are a driving force in the cryptocurrency industry. They provide access to all major and more obscure crypto assets, tokens, and assets. However, the BUSD’s dominant position continues to wane due to regulatory issues, and USDT may go through a “revival”.
USDT Is Moving Up Again
During the initial phase of the stablecoin era, USDT was considered the primary liquidity source. It quickly became the default trading market for all major currencies across every exchange. Rather than relying on US Dollars and fiat transfers, traders saw merit in using a digital dollar. Moreover, the asset gained tremendous liquidity, pushing its market cap into the cryptocurrency top three.
Despite many challenges along the way, Tether’s USDT remains the third-largest project by market capitalization. That is surprising, as there has been strong competition from other stablecoins. In addition, projects considered as “established” – like XRP, Cardano, and even Dogecoin – were all displaced by this pegged currency. Of course, that also confirms how overvalued those alternative projects were at one point, but that is a different debate.
The growth of USDT has been remarkable. It is a stablecoin found on all major networks, including Ethereum, Tron, Omni, NEAR Protocol, etc. The multichain approach would be beneficial to Tether’s overall market cap. However, that isn’t necessarily the case. The project had a market cap of over $83 billion in May 2022. However, it dipped to $66 billion in the following months. Today, it hovers near $70 billion again, following a small surge in recent weeks.
Data by Coinmarketcap – shared by Dessislava Ianeva – shows the USDT market cap has risen by over $2 billion in February 2023. That is an interesting trend, although the month isn’t over yet. It is also the only of the four major stablecoins to note a market cap increase this month. People seemingly flock to the currency that has been subject to some controversy but ultimately remains the most reliable stablecoin.
BUSD, DAI, and USDC Shrink
While USDT notes some renewed success in February 2023, other stablecoins struggle. The recent issues affecting BUSD have been well-documented. Regulatory pressure by the NYDFS has forced Paxos to stop issuing the stablecoin. As there is no new issuer on the horizon, the currency will continue to see its supply dwindle. As a result, holders are again redeeming their BUSD for fiat currencies, resulting in sizeable ongoing token burns.
Interestingly, USDC also noted a market cap dip, although a smaller one. Seeing the market cap dip by roughly $500 million isn’t too surprising. One must also consider there are concerns this stablecoin may face a demise similar to BUSD, although that hasn’t been confirmed. Dai, the leading crypto-backed stablecoin, also saw its market cap decrease slightly. That isn’t unusual, as its issuance is tied to MakerDAO, which goes through ebbs and flows of popularity.
Overall, the demise of BUSD will not make much difference for the stablecoin industry. They still combine for a market cap of over $135 billion and have half of their market cap in daily trading volume. The big question is whether Frax, TUSD, USDD, USDP, GUSD, and USTC can make a meaningful comeback.
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