The market share of Tether grows to 61 %, a two-year high, since crypto centralization increases: a report

the central theses

• Tether opened the year with a market capitalization of $ 66.2 billion, but has grown by 22 % to $ 81 billion
• Circleusd moved in the opposite direction and lost 21 % of its market capitalization
• The proportion of Tether in the stablecoin area is up to 61.5 %, the highest brand has been
for two years
• The collapse of Terrausd in May 2022 and the closure of Binanceus in February increased the concentration on the StableCoin market
• Circleusd fights with regulatory concerns in the USA and the consequences of bank chaos when it was 8.25 % of its reserves at Silicon Valley Bank
• The growth of Tether's market share should only increase, but the concerns about the reserves on which the stable coin is based remains
• The centralization of wealth is a massive stress for the entire crypto industry, the understanding of the concept of decentralization is still decreasing

last October I published a deep dive in the stablecoin wars. Things have changed a lot since then.

A few weeks later, in November, ftx collapsed , sent the entire crypto market bananas, capital flowed out of the room. Then, in February, the third largest stable coin in the world, Binanceusd, was closed by the supervisory authorities (deep dive here ).

Finally, in March the second largest stable coin in the world, Circle USD, was reduced to 88 cents in the middle of the banking chaos before its bond was restored after the US government guarantees bankruptcy at the fallen Silicon Valley Bank.

Despite all the adversities, the stable coin with the perhaps most controversial status, Tether, was the one with the slightest drama.

Click "Play Timet Bail" in the graphic below to see the movements of the entire StableCoin market in the past two years-and the growth of Tether.

terrausd and binanceusd fall

below the previous diagram is shown in static form. We can immediately see some massive developments. The first is in May 2022, the well-laid breakdown of Terrausd, the Luna ecosystem that is flames when it turned out that its uncertain stable coin model was incorrect.

The second is the closure of the bus in February 2023, which is less harmful to the market and a gradual decline than VAT (luckily, say crypto investors). Market capitalization is currently $ 6.2 billion compared to $ 17.5 billion two months ago, an evaporation of two thirds of the offer, the last third will probably follow shortly.

The following diagram represents the situation more clearly, since it indicates the market capitalization of each stable coin after the VAT collapse.

Circle falls off and Tether grows

The cases of Binanceusd and Dai are obvious. The former falls to zero, since the supervisory authorities prohibit the embossing of new stocks, with the Binance stable coin gradually comes out of circulation.

as far as DAI is concerned, it has problems with the scaling due to its oversurance model (in which the users have to bind additional capital due to the volatility of the underlying crypto), which means that it will probably never make much noise under its current composition. It is not surprising that it has lost a bit of capital, but has not really done something noteworthy.

The fascination lies in the analysis of Circleusd (USDC) and Tether. More precisely, how you have behaved in the past four months. The duo moved in completely opposite directions in 2023. USDC opened the year with a market capitalization of $ 44.1 billion. Today the number is $ 31.6 billion, a decrease of 21 %.

Tether, on the other hand, opened the year 2023 with a market capitalization of $ 66.2 billion and is now $ 81 billion, which corresponds to an increase of 22 %.

But why?

well, USDC fights for two obvious reasons. The first is that it had 8.25 % of its reserves at Silicon Valley Bank. When the bank collapsed, the USDC lowered 88 cents when the market was panicked. While the deposits have been guaranteed since then, the stable coin has not regained its market capitalization.

The second is the regulation. USDC is based in the United States, where the supervisory authorities have so far intervened hard this year. The closure of BinanceSD showed this visible to everyone. People immediately feared that USDC could go the same way.

In addition, there are ongoing developments related to Coinbase, a partner of Circle. The stock exchange recently received a message from Wells, which is usually preceded by legal steps, in relation to the potential violation of securities laws.

Tether, on the other hand, is based in Europe, where the regulations are much more friendly - and less insecure. The next graphic shows how much she has benefited from this - its market share has grown noticeably to 61.5 %since the beginning of the year, and the highest value in two years. He opened the year with a share of only 48.1 %.

The market share of USDC has dropped from 32.1 % to 24.1 % since the beginning of the year. Binanceusd fell from 12.0 % to 5.1 % in the same period.

Of course it would be careless not to mention the abundance of the room in general. The StableCoin market, like crypto as a whole, is currently very illiquid. I published a deep dive we looked at this two weeks ago because the stable coin credit on the stock exchanges has recorded 45 % outflow in the past four months. Since October 2021, very few stable coins have been on the stock exchanges.

If you look at the overall market capitalization of stable coins, it has been declining continuously for a year.

Is Tether dominance a good thing?

tether is really the outlier across the board. While the other coins have either fallen to zero or have lost considerable capital, Tether's market capitalization is not far from what it was before the collapse of Terrausd, the groundbreaking moment that really triggered the crypto bear market.

essentially Tether has caught many of the drains of other stable coins, especially in the past few months. And the majority of what it did not pick up has completely left the StableCoin market.

But is it good that a coin, Tether, holds a market share of 61 % that only seems to grow?

not really. And there are two reasons for that.

The first is that this ironically shows how centralized a lot of crypto is. If Tether happened something, the entire ecosystem would fall into an absolute chaos that may be existential for the industry as a whole, Tether is so important for the underlying pipelines of space.

This should always be what Krypto fought against building a more decentralized financial system. This has proven to be largely idealistic at this point. Even in the "decentralized" area of Defi, the majority of the activity is carried out via USDT, a stable coin that can be closed directly by the supervisory authorities (as well as USDC).

"crypto was sold as a decentralized alternative to the old financial system. However, a look at the stablecoin market shows that the reality looks completely, completely different. Defi and the entire crypto ecosystem are becoming more and more central-Tether has nothing but freedom in front of them. see. ” said Max Coupland, director of Coinjournal.

The second problem with Tether growth is the transparency, possibly the most covered - but so vital - story in cryptotechnology. Tether is no stranger to controversy for his reserves, with long -term doubts whether it is 100 % secured.

Lately it has improved somewhat with the publication of reports, but has still paid fines in connection with false information in the past, and its standards are far away from what they would expect from a listed company, for example. But Krypto doesn't work that way at the moment. Instead, opaque financial data and oral promises rule.