The dominance of USDT, the largest stablecoin by market capitalization, has been in decline in the past 2 years. This is according to an update by Glassnode, the on-chain financial metrics and data charting platform. The report which was released by the company on July 8 says that USDT has been in a macro decline since 2020.
The report says that USDT, which has a dominance of 88.3% has now fallen to 45.2%. This has been accentuated by the recent attention that the stablecoin market has attracted to itself since the Terra USD lost its peg to the dollar. The implication of the losses is that USDT now has half the market share it once dominated in the last couple of years.
The Rise of Competing Stablecoins
The consequence of the loss of dominance by USDT is that other prominent stablecoins have gained market shares and dominance. This is as more investors seek alternatives to USDT as they seek security while exiting the coin market, especially during the bear market.
The report says that in the same time-frame of 2 years, USDC dominance has increased more 4-folds while that of the Binance stablecoin, BUSD has increased 7-folds, while DAI has increased nearly 4-folds.
In a reaction to the report, an investor, Valerie Hupin, said,
“It’s just supply that reduces. And it’s not like they’re putting their money out of USDT to USDC because the USDC trading volume didn’t even change to 5-8% over it’s circulation, how dumb is that”
Need for Better USDT Transparency
Another investor, Boohm, said that transparency on the part of Tether would solve the issue of trust that a lot of investors have with respect to the stablecoin. According to them,
“Transparency counts. USDT reserves confirmed by a Tier 1 accountant would solve everything.”
Another investor, Eric Foreman, maintained that despite the drop in dominance, that USDT has not performed badly judging from the prevailing market conditions. While another, Scarlett said that the dominance of USDC is a function of printing more of their stablecoins at a time that Tether is reducing USDT in circulation.
“USDC is dominating when it comes to printing. S. And for the record, market cap is not the basis of dominance. Look at the daily trading volume, you will all see how tether dominate the market”
