Tether Dominates Stablecoin Market with 66% Share, $14 Billion Profits in 2024

Tether, the leading stablecoin, continues to dominate the market despite the presence of competitors. As of April 25, Tether holds approximately 66% of the market share among stablecoins, significantly outpacing its closest rival, USDC, which holds around 28%. This information was highlighted in a report released on the same day. The report also mentioned Ethena's USDe, indicating the presence of other stablecoins in the market, although Tether's market share remains unchallenged.

The dominance of Tether in the stablecoin market can be attributed to several factors. Firstly, Tether has established itself as a reliable and widely accepted stablecoin, with a strong track record of maintaining its peg to the US dollar. This reliability has made it a preferred choice for traders and investors looking to hedge against market volatility. Secondly, Tether's extensive network of partnerships and integrations with various exchanges and platforms has further solidified its position in the market. This widespread adoption has made it easier for users to access and use Tether, contributing to its continued dominance.

Tether's profitability is also a significant factor in its market dominance. The company earns revenue by accepting US dollars to mint USDT and subsequently investing those dollars into highly liquid, yield-bearing instruments such as US Treasury bills. This strategy has allowed Tether to clock nearly $14 billion in 2024 profits, making it the most profitable stablecoin issuer.

Despite the potential for market dispersion, analysts believe that the stablecoin market will continue to be dominated by a few key players. This 'winner-takes-most' dynamic is evident in Tether's market share, which is nearly three times as many users as Uniswap and 50% more transactions than the next app. This indicates that Tether is by far the largest use case of onchain activity.

However, the stablecoin market is not without its challenges. The report also highlighted the potential risks associated with weekend liquidity, which can lead to increased volatility in the market. This is particularly relevant for stablecoins, which are often used as a safe haven during periods of market uncertainty. The report warned that despite the recovery in investor sentiment, the market's structural weaknesses may still result in downside momentum during periods of weekend illiquidity. This is a reminder that while Tether may be the dominant stablecoin, it is not immune to the broader market dynamics that can affect all cryptocurrencies.

The report also mentioned the potential impact of macroeconomic news on the stablecoin market. Unexpected macroeconomic developments can increase volatility during low liquidity periods, which can affect the stability of stablecoins. This is a reminder that while stablecoins are designed to maintain a stable value, they are not immune to external factors that can affect the broader market.

In conclusion, Tether's dominance in the stablecoin market is a testament to its reliability and widespread adoption. However, the market is not without its challenges, and the potential risks associated with weekend liquidity and macroeconomic news are reminders that the stablecoin market is still subject to broader market dynamics. As the market continues to evolve, it will be interesting to see how Tether and other stablecoins adapt to these challenges and maintain their position in the market.