Tether (USDT) Achieves $90 Billion Market Cap, Signaling Renewed Trust in Crypto

Stablecoin Tether growth reflects crypto market resilience and investor trust amid regulatory challenges.

Tether (USDT), the world’s largest stablecoin, has seen its market capitalization surge to a record $90 billion on December 6th, before slightly retreating to $89.9 billion. This growth indicates a resurgence of confidence in the crypto market, despite regulatory challenges.

In the past month, the market cap has risen by approximately 6%, marking a year-to-date increase of over 35% from a modest $66.24 billion at the start of the year. This growth underscores Tether’s ability to weather market volatility and restore investor confidence.

This increase also reflects an enhancement in market liquidity, with an influx of new capital into the ecosystem. Following significant events such as the Luna collapse in June 2022 and the Silicon Valley Bank (SVB) crisis in March, the overall supply of stablecoins decreased, indicating market uncertainty.

However, since October 2023, the total stablecoin supply has consistently increased, signaling a positive shift. This upward trend serves as an early indicator of improved on-chain liquidity, suggesting more capital is ready for deployment, as per the latest CoinMetrics report.

USDC, a widely used stablecoin in decentralized finance (DeFi) applications, saw a significant portion of its supply in smart contracts, peaking at over $20 billion in March 2022. However, this figure halved from its peak of $14 billion in March to $7 billion by December 2023.

In contrast, Tether (on Ethereum), primarily held in externally owned accounts (EOAs), has shown a different trajectory. Its involvement in smart contracts has grown, increasing from $4 billion at the start of the year to over $6 billion.

The report also found that the number of addresses holding more than $100k USDC has declined to 13k addresses, while those for USDT on Ethereum remain relatively stable.

However, USDT on the Tron network tells a different story. Tether on Tron has seen steady growth in adoption, with nearly 40k addresses holding more than $100k. This trend can be attributed to its lower transaction fees and potentially increasing use in developing economies across parts of Latin America, Africa, and Asia.

There has been a significant increase in stablecoin spot trading volumes, underscoring their utility as a quote asset on both centralized and decentralized platforms. CoinMetrics found that USDT continues to dominate the trusted spot volumes, reaching $18.8 billion on November 15th.

These volumes rank second only to those observed during significant market events such as the Terra, FTX, and SVB collapse.

USDC volumes have also recently surged, reaching $2.5 billion in November – a record high in USDC trading volume.

In contrast, the volumes for other stablecoins have declined, primarily due to the reduction in BUSD volumes, which Binance announced it would cease supporting this month.

Overall, the upward trend in volume signifies a growing interest among traders and investors in gaining exposure to crypto assets with the potential for appreciation, particularly as the broader crypto markets are experiencing an upswing.