USDT/USD: Collapse of SVB Solidifies Tether’s Dominance Over USDC
- The collapse of SVB caused Tether’s market cap to be double that of USDC briefly.
- Concerns surrounding USDC’s holdings at SVB had caused inflows of almost $1bn to USDT from USDC.
- Tether’s 2nd closest rival, BUSD, has also suffered setbacks due to scrutiny by the SEC.
In the battle for the stablecoin crown, there are currently only 3 true contenders. The first is Tether (USDT) – the stablecoin which launched in 2014 and has now become a staple of the space. The second is Circle’s USDC, which has always been at least slightly behind it by market cap since it launched in 2018. The third is Binance’s BUSD. These three coins alone represent almost 90% of the entire stablecoin market. Recent events in the US banking sector, however, have made the battle for stablecoin supremacy a little more one-sided.
Lagging behind
Earlier this week, USDC experienced heightened outflows due to its holding of more than $3bn at the now-collapsed Silicon Valley Bank. Fears surrounding USDC’s financial condition caused the token to de-peg from the dollar. But after news that depositors into Silicon Valley Bank would be receiving their funds back in full, USDC saw confidence in its token somewhat restored and its dollar-peg reestablished.
Although, the damage it would seem, may already have been done. On Wednesday, its main competitor, USDT, added almost $1bn to its market cap, while USDC lost the same amount – due to investors opting to move their funds into what they perceived to be an asset less exposed to SVB. At $75bn, USDT’s market cap has become more than double that of USDC – a stark reminder of Tether’s dominance over the space.
A comfortable position
It’s not just scrutiny of USDC that’s accelerating Tether’s market dominance either. Binance’s BUSD has come under scrutiny by the Securities and Exchange Commission, for allegedly violating its regulations on consumer protection. The pressure caused the token’s issuer, Paxos, to cease minting the token and “end its relationship with Binance” last month. With its main competitors hitting roadblocks, and seemingly having overcome concerns surrounding how its tokens are backed – Tether seems to be in an unshakeable position of dominance.