Stablecoin Market Sees Supply Increase for Tether as Competitors Decline in Light of Recent Regulatory Developments

While the stablecoin market has seen significant redemptions over the past three months, the supply of Tether, the largest stablecoin by market cap, has increased by 2.46 billion since mid-November 2022. Tether is the only one of the top five stablecoins by market valuation. that has seen an increase in supply over the last three months.

Tether supply rises while competitive stablecoins decline

A lot has changed in the last three months since the FTX crash and its aftermath. The stablecoin economy has undergone significant redemptions, and the 30-day statistics dated February 14, 2023, show that three of the top five stablecoins are facing a decline in their market capitalization. The affected stablecoins are usd coin (USDC), binance usd (BUSD) and DAI. While BUSD experienced significant redemptions following the announcement that Paxos would no longer mint the stablecoin, USDC experienced its biggest drop, shedding 6.2% over the last month. BUSD is down 4.5% over the past 30 days while DAI is down slightly by 0.1%.

Tether (USDT), on the other hand, has seen a 3.2% increase in supply over the last 30 days. In fact, over the past three months USDTSupply in Russia increased by 3.74%. Together, the top five stablecoins make up the majority of the stablecoin economy and a significantly larger volume of trade in dollar-pegged tokens. November 17, 2022 USDTworking stock was approx. 65.94 billionand after an increase of 3.74% today it rose to 68.41 billion. While USDTsupply has risen over the past three months, the last four stablecoins have not shown any growth and, in fact, all have experienced declines.

For example, on November 17, 2022, the number of US dollars in circulation was about 44.40 billionbut it has since fallen to the current 40.98 billion BUSD it had in circulation 23.03 billion November 17, 2022, and now it is approximately 15.69 billion, down 31.87%. The Makerdao DAI token has 5.09 billion in circulation today, compared to 5.44 billion three months ago, a decrease of 6.43%. The fifth largest stablecoin by market valuation, FRAX, has circulated 1.177 billion November 17, 2022, and as of February 14, 2023 – 1.024 billion, which is 12.99% less.

Over the past five years, stablecoins have expanded significantly, and some dollar-pegged tokens have failed to survive. The stability of the reserve and the ability of the issuer to maintain it are critical to the success of a stablecoin. The collapse of Terra UST in 2022 highlighted this importance, and last year demonstrated that the economy of a stablecoin is heavily influenced by external factors such as economic conditions, market volatility, and changes in legislation.

What do you think about the recent growth in the supply of Tether compared to the rest of the stablecoin market? Share your thoughts in the comments section below.