Despite a particularly resilient bear market, the stablecoin USDT has managed to maintain its relevance. The asset had even been able to take advantage of the USDC’s recent setbacks to maintain its attractiveness and its hegemony on the market. Not for long, probably.
USDT threatened by structural changes in the stablecoin market
Tether USDT is not only at risk of being banned from doing business in the United States. The asset may soon lose its dominance in the stablecoin market. A hegemony recently consolidated thanks to the banking crisis which had affected the rival stablecoin USDC.
This news comes from DeFiance Capital, a venture capital firm whose activities mainly cover the DeFi sector. Recently, in fact, the firm delivered an analysis of stablecoin market trends.
In it, she highlights risks to the sustainability of USDT as the most important asset in the stablecoin ecosystem. These threats stem from users’ perception of the relevance of USDT.
These could in fact move towards other stablecoins deemed much more effective in the current circumstances. A perspective also confirmed by the arrival of new stablecoins on the market. USDT could therefore lose significant market share.
According to DeFiance Capital, the emergence of decentralized stablecoins is the biggest threat that USDT will have to deal with. Compared to the latter, these would offer users decentralized options built around a blockchain.
These decentralized stablecoins thus offer some major advantages. Unlike centralized stablecoins like USDT, they provide enhanced transparency and security. This, by limiting the risk of embezzlement.
In addition, DeFiance Capital believes that the regulatory stringency that the asset has been subjected to in recent months constitutes an additional level of risk. This situation could ultimately further weigh down the growth of the USDT, which would be doubled by other stablecoins.
Yet this scenario does not obscure the fact that the asset remains relatively stable in the market despite the conditions in the US economy. This consistency indicates, according to DeFiance Capital, investor confidence in the effects of a potential US default.
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