According to data from multiple sources, stablecoin issuer USDT has emerged from the gloom and doom of a declining stablecoin market to hit a record-breaking market cap of $83.2 billion. The stablecoin hit its all-time high on Thursday, taking it just over its peak from a year ago, and now commands 7.5% of the total
cryptocurrency market capitalization. This signifies a growing demand for USDT, especially in the cryptocurrency ecosystem. Despite regulatory concerns and increased competition, Tether has continued to dominate the stablecoin landscape, cementing its position as the largest stablecoin by market capitalization. The stablecoin market especially suffered monumentally after the dramatic implosion of the Terra/LUNA ecosystem in May 2022. It was exacerbated by the increased scrutiny from regulators and central banks around the world that wanted to prevent a repeat of the catastrophic event. Circle-issued USDC, which is the second largest stablecoin, was also hit badly by the downfall of its banking partner Silicon Valley Bank in March. Even the one-time $20 billion market cap Binance USD (BUSD) stablecoin also saw its struggles when issuer Paxos was forced by the
New York Department of Financial Services (NYDFS) to stop minting new tokens. Although USDT, too, struggled in the challenging market environment, losing around $18 billion of its market cap, it was able to regain the lost market capitalization and hit a new record high at $83.2 billion. While stablecoins have faced scrutiny from regulators and central banks around the world, Tether has managed to thrive amidst the challenging environment. Its ability to maintain a stable value pegged to the US dollar has attracted investors seeking a reliable digital asset that mitigates volatility often associated with cryptocurrencies. In fact, as a report from digital asset researcher Kaiko notes, The surge in Tether's market cap can be attributed to several factors. First, the increasing adoption of digital assets by mainstream financial institutions has bolstered demand for stablecoins as a means of facilitating transactions and providing liquidity. Furthermore, Tether's market cap growth is indicative of its expanding user base. DeFi platforms also rely on stablecoins like Tether to facilitate lending, borrowing, and yield farming activities, further contributing to its rising market cap. Despite its success, Tether has not been without controversy. The stablecoin has faced allegations of lacking transparency and adequate backing for its reserves. However, Tether has consistently maintained that its are fully backed by assets, predominantly cash, and short-term debt instruments.