Investors are fleeing from Tether (USDT), says on-chain data. The stablecoin giant, as a result, has lost significant market share amid a slew of market corrections.|cd8db497a60cf395a7538452754ed98b|
Tether currently sits on a $68 billion market cap, the lowest since October last year, down from the recently established all-time high of $83 billion. Since then, the stablecoin underwent a cascade of repeated declines. According to the data from CoinGecko, it freshly shed around $4 billion since June 14 alone.
TerraUST’s collapse pushed market players to seek sanctuary in other digital assets that maintain a one-to-one peg with the USD. As a result, the ensuing market contagion drove crypto and stablecoins to wobble, during which USDT briefly lost its dollar parity as it plunged to 95 cents.
While it managed to re-peg quickly, the deathly spiral resulted in many investors ditching the stablecoin giant for its rival – USDC, a top contender. Upon gauging further, it was found that, unlike the falling market cap of USDT, Circle’s flagship stablecoin has continued to follow an upward trajectory.
After topping out in the first week of March, USDC’s market cap quickly bounced back in mid-May. As reported earlier, it even went on to become the stablecoin of choice on the Ethereum blockchain.
During the same time, Binance USD (BUSD) also noted a minor but relevant bounce back up. With TerraUSD gone, the three largest stablecoins – Tether, USD Coin, and Binance USD – have managed to retain their positions in the top ten leaderboard.
Tether’s shrinking market cap comes days after it refuted rumors that the stablecoin is largely backed by Chinese and Asian commercial paper. Regarding the recent events impacting the crypto lending platform, Celsius, the stablecoin issuer stated,
“Celsius position has been liquidated with no losses to Tether. Tether’s lending activity with Celsius (as with any other borrower) has always been overcollateralized. Tether has currently zero exposure to Celsius apart from a small investment made out of Tether equity in the company. Tether is aware of other rumors being spread, suggesting that it has a lending exposure to Three Arrows Capital – again this is categorically false.”
Separately, Tether’s CTO – Paolo Ardoino – outlined an attack against the company’s servers, but reassured that it was not successful.
This morning @Tether_to received a ransom request to avoid mass DDOSes.
They tried already once.
On a normal day we have around 2k reqs/5min
The attack brought us to 8M reqs/5min. pic.twitter.com/rWEan5VNFX
— Paolo Ardoino (@paoloardoino) June 18, 2022
While other dollar-pegged tokens may be eating up Tether’s share, for the first time in history, the total stablecoin supply as a whole has dropped sharply in the second quarter of 2022 (excluding UST). CoinMetrics head of research and development Lucas Nuzzi revealed that stablecoin redemptions rose massively due to short-term liquidity and concerns about insolvency.
Of all centralized issuers, Tether witnessed the most redemptions, wiping approximately 7 billion of its supply in the past month, as investors attempted to pull out from the market and avoid any further damage.
Nevertheless, the rapidly declining prices of all non-stablecoin crypto assets mean that stablecoins have risen in terms of market cap and placement. Recent data shows that there’re four such digital assets in the top 10 largest cryptocurrencies, and the fifth one is close to breaking in as well.
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