Just when we thought USDC might come after Tether, USDC lost its peg for a short while back in March 2023 and Tether proved itself once again. After years in the industry, a lot of FUD around it, Tether still stands undefeated in the stablecoins arena.
Stablecoins have become an essential part of the crypto industry. The crypto dollars have been useful for people outside of US, where their local currency is not performing at best. More people and businesses are starting to accept and work with crypto dollars. We are witnessing a whole new sector emerging in the crypto industry.
Tether started its journey back in 2015 and allegedly it founded by the Bitfinex exchange. In general, most of the stablecoins are issued by exchanges, except in some cases like DAI trough a decentralized protocol.
A lot can be said about Tether, a history with controversy, mainly around the fractional dollar reserves, or is every USDT backed by equal amounts held in banks accounts. There have been court cases etc, but up until now Tether has been able to manage the situation and keep growing.
One of the biggest wins for Tether is the way they handled 2022 and all the moments when projects collapsed, causing domino effects. On few occasions there were massive amount of withdrawals initiated in a short amount in time. First the TerraUST collapse in May 2022, when a massive 15B were withdrawn from Tether, and later the collapse of FTX as well. Some other crises are in between as well.
Tether successfully handled all the withdrawals and the crisis in between. A massive test that it passed.
With this said, let’s take a look at the data for USDT.
Daily Tether Printed
Here is the chart for the USDC printed per day.
As we can see in the first years there was not a lot of printing for USDT. The larger amounts started to come in 2020 and increased significantly in 2021.
On occasions there was more than 1B USDT issued or burned per day. We can notice the few spikes down in 2022, some of them with more than 5B on a day.
When we zoom in 2023 we get this:
In 2023 we can see mostly positive daily bars for Tether.
There was a growth in the Tether supply especially in March 2023. At this time USDC was losing its peg and a lot of funds migrated to Tether. Since then, a more stable period for Tether with daily oscillation less than 100M. The last few months have been very quiet. This seems to be the overall trend in the crypto market, having in mind that Bitcoin has stayed around the 30k mark price for months now.
Monthly USDT Printed
Here is the monthly chart.
The record for USDT printing on a monthly level is in April and May 2021, with 10.5 billions printed in each of these two months. On the downside the record for USDT burned has been May 2022, with 10.7 billions burned in that month. A totally opposite situation in just one year.
June 2022 has a negative of 6 billions and November is around 4 billions.
**When we zoom in 2023 we have this:
We can see that March 2023 was a great month for Tether. This again due to the crisis that was happening at USDC, a lot of funds were accumulated by Tether, almost 9B. June and July are with few hundred millions added to the Tether supply.
Tether Supply
The chart for the USDT supply looks like this.
Quite a big increase in 2020 – 2021 period, reaching 83B in market cap in the beginning of 2022.
Then in May 2022 a big drop, and in the summer of 2022, the market cap of Tether was around 67B. A strong growth in the first quarter of 2023 and Tether is now back at its ATH with 83B in supply. A U shape recovery for Tether.
USDC VS USDT
How is Tether doing against the number one competitor USDC? USDC has came a bit later to the scene, so it has some catching up to do.
Here is the chart.
Up until May 2022, both stablecoins had a similar pattern. Then TerraUST happened and the market cap for Tether decreased while the market cap for USDC increased. This short lived as Tether regain its growth, while USDC kept going down. In the last two years these two are moving in opposite direction.
If we zoom in 2023 we got this:
As already mentioned these two are moving almost in opposite directions.
March was the month with the most volatility when USDC dropped and USDT increased. Since then, USDC kept going down and now is at 26B, while Tether is at 83B. We can notice some flattening out with Tether in the last months.
After all the uncertainty in 2022, Tether kept its dominance in the stablecoins arena and took a big share from its main competitor USDC. There is now no significant player that can challenge Tether, at least in the short term. This being crypto things can change fast, but as they stand at the moment Tether will continue its number one position in the stablecoin arena for a while now.
All the best
@dalz