09 Sep 2022 Josphat Kariuki
Tether Is Back $16 Billion In Front Of USDC, Expanding Its Market Cap Gap
Tether (USDT), the world’s largest stablecoin to date, seemed in a rough spot against its most prominent rival – USDC, as Tether started 2022 with as much as $36 billion headroom when comparing its market cap to this of USDC.
However, the gap between the two stablecoins’ market capitalizations has shrunk to around $10 billion in just six months, indicating that USDC is maybe setting itself for an overtake. Those indications may prove to be wrong, as since July Tether has been picking up its pace and managed to secure a 16$ billion lead.
USDT has made several steps to increase its lead by further reducing commercial paper in its treasury, as well as allowing users to redeem the stablecoin for cash. Furthermore, Tether’s commercial paper decrease comes amid the U.S. Office of Financial Assets Control’s sanctioning of Ethereum mixer Tornado Cash, which allegedly used Tether as a median of exchange.
“We are fully committed to maintaining our role as the leading stablecoin in the market,” CTO of Tether, Paolo Ardoino, noted, adding that “The utility of Tether continues to be supported by the transparency of its reserves and has been a leading source of stability allowing us to build a tool for the global economy.”
USDC and its troubles
Meanwhile, USDC, which is issued by Circle, has dealt with some headwinds, one of which may shift the layers in unprecedented ways. It turns out that Binance would begin converting user balances and deposits of USDC, Pax Dollar (USDP), and True USD (TUSD) into its own Binance USD (BUSD) stablecoin. Thus – erasing more of its market capitalization.
“Given how limited BUSD usage is outside of Binance, this will likely benefit USDC usage as the preferred cross CEX and DEX stablecoin rail,” Circle CEO Jeremy Allaire commented, stressing that “Unless Binance can convince all their competitors to get behind BUSD, which is unlikely.”
Ardoino didn’t respond initially, but reposted some Twitter statements that signaled the “beginning of the end for USDC” and called it a “hostile takeover of competing stablecoins to capture the yield on their deposits.”
Crypto market uncertainty?
Stablecoins are a special kind of fiat-pegged cryptos, which are backed either by treasury bills, bonds, cash reserves, and other assets or are acting algorithmically and adjusting their price almost in real-time. However, stablecoins have another key role in the crypto sector, apart from being used as an onboarding tool – they are the preferred way of mitigating the risks, associated with the inherent volatility of cryptos.
Indeed, the past week saw several of the top-tier cryptos losing key support zones, which may also add to the market cap gap increase between Tether and USDC. Bitcoin, for example, started the month with several promising upswings above $20,000, but ultimately crashed below $19,000 just to rebound at a current price point of $19,087.11 per BTC. Many crypto investors chose either to sell their BTC, or to convert them to Tether, which is also known to be “the gateway to Bitcoin”.
Tether’s trading volumes increased amid the BTC price drop, indicating that the number one stablecoin is still a go-to option for crypto-savvy individuals to store their value in times of uncertainty.Binance Crypto Market Tether cryptocurrency news crypto news Stablecoin Crypto Price Market Capitalization USDC