Kaiko Analytics: New competition Tether is eating away at USDT market share

If the new report from market analysis platform Kaiko Analytics is to be believed, Tether is currently facing stiff competition in the world of stablecoins. It is not without reason that the new report is entitled “Tether Loses Market Share”. According to Kaiko, USDT’s market share will decline by 13 percent from the start of 2024.

Competition for Tether

Losing that 13 percent of the market would mainly be due to the rise of two dollar-pegged rivals (FDUSD and USDC).

“Despite its dominant position in the market, USDT’s stock has entered a downward trend on centralized exchanges. Measured from the beginning of the year, this has fallen from 82 to 69 percent.

This decline can largely be attributed to growing competition from stablecoins like FDUSD, which benefit from transaction-fee-free status on Binance.

USDC also saw its market share grow, indicating that people increasingly value regulated alternatives. Currently, American-issued stablecoins account for 10 percent of total trading volume,” according to Kaiko Analytics.

More rivals on the way?

According to Kaiko, other rivals like Ethena (USDe), which offer unique returns, could also cut into Tether’s dominance.

“Another reason for Tether’s declining market share could be linked to the rise of innovative interest-bearing stablecoins like Ethena USDe. Since its launch in February, the volume of this coin has increased significantly.

Although the coin has fallen from its all-time high of over $800 million following the Ethena ENA airdrop,” according to Kaiko Analytics.

Despite increasing competition and losing market share, Tether is currently making extremely large profits. For example, it managed to book a profit of $4.52 billion in the first quarter of 2024.

These profits are good for bitcoin, because Tether invests 15 percent of the profits directly in the digital currency. It currently owns billions of dollars worth of bitcoin.