PayPal's PYUSD Loses Ground to USDT, RLUSD as Market Cap Falls 12% Ahead of Earnings

PayPal’s stablecoin, PYUSD, is facing growing challenges as it loses ground to dominant competitors like Tether’s USDT and Ripple’s RLUSD, raising concerns ahead of the company’s second-quarter earnings report on July 29. Despite a bullish golden cross pattern in its stock price, which has driven investor optimism, the underperformance of PYUSD highlights a widening gap between PayPal’s core payment business and its foray into crypto. The stablecoin’s market capitalization has fallen to $890 million, down from a peak of $1.02 billion, while USDT and RLUSD have surged in adoption, with RLUSD alone amassing $577 million in assets since its December launch [1].

The PYUSD decline comes as PayPal attempts to leverage its stablecoin strategy to generate high-margin revenue, particularly through bond investments yielding over 4% annually. At $900 million in assets, PYUSD could theoretically generate $36 million in annual revenue from such investments, but its shrinking market share undermines this potential. Competitors like USDT, which holds $163 billion in assets, and USDC, with $64 billion, benefit from established networks and broader merchant acceptance, leaving PayPal struggling to differentiate its offering [1].

Regulatory dynamics further complicate the outlook. The recently enacted GENIUS Act, which requires USD stablecoins to be backed by U.S. dollars or bonds, could theoretically favor PYUSD over USDT, which includes Bitcoin and gold in its reserves. However, RLUSD and USDC—both compliant with the act—have already gained traction, limiting PayPal’s ability to capture market share. Analysts note that sellers using PayPal’s unbranded products often opt for stablecoins due to their negligible transaction fees compared to PayPal’s 2.89% merchant charges, exacerbating the pressure on the company’s payment business [1].

Investor sentiment remains split. While PayPal’s stock has rebounded on technical indicators like the golden cross and Fibonacci retracement levels, analysts project mixed outcomes for its earnings. Revenue is expected to rise to $8.08 billion for Q2 and $8.13 billion for Q3, representing modest annualized growth, though profitability and forward guidance will be closely watched [1]. The success of PYUSD will be critical to PayPal’s long-term strategy, but its current trajectory suggests the company may need to reevaluate its approach to competing in a crowded stablecoin market dominated by early movers like Circle and Coinbase.

As the earnings date approaches, the market will scrutinize whether PayPal plans to pivot its stablecoin strategy or continue pushing PYUSD against entrenched rivals. A lack of clarity on this front could further erode confidence, particularly as the fintech landscape evolves rapidly under regulatory and competitive pressures. For now, the golden cross in PayPal’s stock price offers a counterpoint to PYUSD’s struggles, but the company’s ability to integrate its crypto ambitions with core operations will determine its next phase of growth [1].

Source: [1] [PayPal stablecoin bet Is losing ground—just as earnings loom] [https://crypto.news/paypal-stablecoin-as-pyusd-loses-ground-earnings/]