Tether’s stablecoin USDT has achieved a significant milestone by surpassing the $84 billion supply mark on October 21. This milestone comes with a week-on-week increase of about $1 billion, coinciding with the current market rally. The optimistic sentiment surrounding the possible approval of a Bitcoin spot exchange-traded fund (ETF) in 2023 has been driving this market rally.
Despite facing challenges in the past year, including the collapse of crypto firms like FTX and Three Arrows Capital, Tether has displayed remarkable resilience. Last year, Tether’s market capitalization dipped to $66 billion, and doubts arose regarding the stability of its reserves.
However, Tether has managed to bounce back and strengthen its position in the market. This year alone, it has increased its token supply by nearly $18 billion. This achievement can be attributed to a favorable market environment and the struggles faced by its rivals such as Binance USD (BUSD) and USD Coin (USDC).
Influence of Regulatory Measures
Tether’s dominance in the market was further solidified by regulatory measures against its competitors. The New York Department of Financial Services directed Paxos, the issuer of BUSD, to halt additional minting. Additionally, the U.S. Securities and Exchange Commission classified BUSD as a security. These events led to a sharp decline in BUSD’s supply, which fell from its peak of $22 billion in November 2022 to approximately $2 billion currently.
Another competitor, USDC, faced its own challenges when it was revealed to have exposure to the failed crypto-friendly Silicon Valley Bank. Although USDC recovered from a brief depegging, its circulation has consistently declined despite improvements in the market.
Tether’s Market Dominance
Tether’s surge in supply has solidified its position as the dominant stablecoin in the market. Data from DeFillama shows that Tether now commands nearly 70% of the market. Paolo Ardoino, Tether’s CEO, celebrated this achievement with an “84B $USDt” post on the social media platform X.
The significance of Tether’s USDT reaching an $84 billion supply goes beyond just a financial milestone. It serves as an indicator of investor confidence in the stablecoin as a safe harbor, especially when other options face regulatory and financial hurdles. This development also reflects the overall market sentiment, which is currently leaning towards optimism.
