Tether (USDT) has been a major player in the stablecoin market for a long time. However, recent data shows that USDT’s market share on centralized exchanges (CEXs) is decreasing. In 2024, USDT’s market share dropped from 82% to 74%, according to Kaiko’s data.
The Decline of USDT Market Share
Even though stablecoins have seen many high-profile collapses and de-pegging events in recent years, they still have strong demand. More people are using stablecoins instead of traditional fiat currency. Despite this demand, Tether’s USDT is losing its dominance. Over the last two years, its market share has been eroding.
Kaiko’s latest data highlights this decline in USDT market share. This drop could be due to increased competition from other stablecoins like FDUSD and USDC. These alternatives are becoming more popular due to various promotions and their regulated status.
Competition from Other Stablecoins
One of the reasons for USDT’s decline is the competition from other stablecoins. For example, FDUSD has benefited from Binance’s zero-fee promotions. These promotions make it cheaper to trade FDUSD, attracting more users. As a result, FDUSD has gained a significant market share.
Another strong competitor is USDC, which is a regulated stablecoin. Many users prefer regulated options because they believe these are safer. By the end of June 2024, USDC’s market share reached an all-time high of 12%. This increase was driven by high trading volumes on platforms like Binance, Bybit, and OKX.
The Rise of Yield-bearing Stablecoins
Another factor affecting USDT’s market share is the rise of yield-bearing stablecoins. These stablecoins offer interest to users, making them more attractive. Both Paxos and Tether have introduced their own yield-bearing stablecoins to meet this demand. This move is in response to the growing interest in stablecoins that can generate returns for their holders.
High-Profile Collapses and Market Dynamics
The stablecoin market has seen several high-profile collapses and de-pegging events. Despite these issues, stablecoins continue to capture market share from traditional fiat currency. People still trust and use stablecoins, showing strong demand for these digital assets. However, these events have also made users more cautious, leading them to explore other stablecoin options like USDC and FDUSD.
Impact of Zero-Fee Promotions
Promotions play a significant role in shaping the stablecoin market. Binance’s zero-fee promotions for FDUSD have significantly impacted its market share. These promotions lower the cost of trading FDUSD, making it more attractive to users. As a result, more people are using FDUSD, contributing to USDT’s declining market share.
Trading Volumes and Market Shifts
Trading volumes on major platforms like Binance, Bybit, and OKX have a big influence on the stablecoin market. Increased trading volumes for USDC on these platforms have helped it gain market share. The rise in trading volumes indicates that more people are trading and using USDC, making it a strong competitor to USDT.
Future Trends in the Stablecoin Market
The stablecoin market is constantly evolving. As more stablecoins enter the market and existing ones introduce new features, the competition will continue to increase. USDT will need to innovate and adapt to maintain its position. The rise of regulated and yield-bearing stablecoins suggests that users are looking for safer and more profitable options.
Conclusion
Tether (USDT) is losing its market share on centralized exchanges, dropping from 82% to 74% in 2024. Increased competition from stablecoins like FDUSD and USDC, along with high trading volumes and zero-fee promotions, are key factors in this decline. The stablecoin market is becoming more diverse, with users showing interest in regulated and yield-bearing options. To stay competitive, USDT will need to continue evolving in this dynamic market.
