Crypto news: the turning point of 2023 of the stablecoin Tether among the banks

The key point of this story was the failure of some large USA banks in March 2023. In fact, in particular, the closure of Silicon Valley Bank (SVB) led to a loss of dollars for Circle

2023 was a year of great turning points for USDT, Tether's stablecoin pegged to the US dollar, so much so that it was even appreciated by banks.

Crypto news: 2023 turning point for Tether's stablecoin among banks

The key point of this story was the failure of some large US banks in March 2023.

In particular, the closure of Silicon Valley Bank (SVB) led to a loss of dollars for Circle, the issuer of Tether's main rival (USDC).

At that moment, what was commonly considered the safest stablecoin (USDC by Circle) lost its peg to the dollar, although it quickly recovered it when the United States central bank (Fed) intervened to cover all the shortfalls in the failed banks' deposits.

USDT by Tether, which already dominated the crypto markets at the time, did not lose anything.

At that moment, many stopped using USDC and started using USDT.

The trend over time

Considering the market capitalization of USDT and USDC, before the implosion of the Terra/Luna crypto ecosystem in May 2022, Tether's stablecoin was worth $83 billion, while Circle's was about $50 billion.

At that moment, USDT had a capitalization 66% higher than USDC.

However, the implosion of Terra/Luna was due to the depegging of their algorithmic stablecoin, UST, from the price of the US dollar, and this generated a lot of fear among USDT holders.

But, despite a 20% drop in market capitalization over three months, Tether's stablecoin did not lose its peg to the dollar, and was thus able to grow again.

At that moment, USDT had dropped to $66 billion, while USDC had risen to $55, reducing the gap from 66% to 20%.

Since then, however, USDC's capitalization began a strong and lasting decline, while USDT's stopped falling.

2023

At the beginning of 2023, USDT was still at $67 billion, but USDC had dropped to $44 billion.

With the closure of Silicon Valley Bank in March 2023, USDC's market capitalization plummeted due to the depeg with the dollar, albeit only temporary, and the flight towards other stablecoins.

This collapse stopped only in November of the same year, when it had already fallen to $24 billion. Compared to the peak of $55 billion in July 2022, the loss was 56%.

In January 2023, however, the crypto market had started to recover, so when the flight from USDC occurred in March, many simply turned to USDT, also because Tether's stablecoin had not lost its peg to the dollar.

Thus, USDT's market capitalization rose to $84 billion, returning to the highs of the previous year.

2024 for stablecoins

Starting from November of last year, a true bull run began in the crypto markets, which concluded only in March of this year.

At that point, both USDT's and USDC's market capitalization grew.

While Circle's stablecoin has merely returned above $30 billion, USDT's has even jumped above $110 over the course of the rest of the year.

At this moment, the gap between the market capitalizations of the first and the second largest stablecoin in the world has skyrocketed to +245%.

USDT's current dominance in the stablecoin market is even 70%, which is more than double all the other stablecoins combined.

Banks are becoming more crypto by approaching Tether's stablecoin (USDT)

From the peak of 2022 to today, the market capitalization of Tether's stablecoin has grown by 37%, while that of USDC has fallen by 38%.

Although USDT's growth is probably mainly due to the growth of the crypto markets, in conjunction with the decline of USDC, traditional financial institutions may also have played a certain role.

The fact is that to operate directly on the crypto market, it is not convenient to use fiat currency, but stablecoin. This also applies to traditional financial institutions, so even TradFi companies that choose to operate in the crypto markets inevitably end up encountering stablecoin.

With a dominance of 70%, it is absolutely inevitable that even traditional companies that want to operate in the crypto markets will end up using USDT. Moreover, over time it has also provided greater guarantees of stability, compared to other stablecoins that seemed safer but were not really so.

European MiCA regulation

However, a turning point could occur in the European Union countries with the introduction of the new crypto regulation (Mi