Market capitalization of popular stablecoins Tether (USDT) has risen as have other stablecoins including circle‘S usd coin (usdc) and MakerDAO Midwife Lost my pegs for a while over the weekend.
As a result of increased marketshare for Tether, Binance USD (BUSD)A stablecoin issued by the US-based Paxos Trust Company binanceUSD Coin, and other major stablecoins have seen their share of the stablecoin market go down.
So far in 2023, BUSD has lost almost half of its market cap to around $8 billion, while USDC is down 11% to $39 billion.
Tether, on the other hand, has seen a 10% increase in market cap this year to $73 billion, making it almost twice as large as USDC, the second largest stablecoin in the market.
The latest surge in Tether’s market cap comes after its main competitor USDC lost its peg this weekend, The de-peg occurred when news broke that Circle, the company that issues USDC, had $3.3 billion out of $40 billion in reserves for USDC deposited at Silicon Valley Bank (SVB).
SVB collapsed on 10 Marchbut the US government later came to the rescue and guaranteed that all depositors would have access to their money. Government bailout effectively saved USDCwhich later reverted to its $1 peg value.
“a lot of pressure to sell”
while commenting Kevin March, co-founder of trading firm Floating Point Group, told the Wall Street Journal on Tuesday that his firm was among several market players that transferred funds from USDC to USDT when the de-pegged occurred.
“Many of our clients chose to do this in order to exert a lot of selling pressure on the USDC-USDT trading pair,” March said.
Interestingly, this Tether’s status as the least regulated and according to some the least transparent stablecoin may be working in its favor now.
Steven Kelly, a researcher at Yale University’s Financial Stability Program, told Wall, “It’s a validation of what we know about money and things that try to be money — when you provide too much information.” , then you are more susceptible to scoring runs.” Street Journal, before adding at the end:
“We knew Circle had exposure to SVB, we found out what it was and had a run. We really don’t know much about Tether, and it seems safe for just that reason.”