The third-largest cryptocurrency by market size, Tether (USDT), is almost poised to restore all of the market value it lost when algorithmic competitor TerraUSD went under less than a year ago.
According to statistics from CoinMarketCap, USDT’s market value at the time of writing was $81.5 billion. Prior to cryptocurrency investors starting to sell their holdings as a result of Terra’s fall, Tether’s market value peaked at roughly $83 billion in May of last year.
Tether USDT momentarily lost parity with the dollar when TerraUSD (UST) depegged in May 2022, causing market sell-offs. Its market value also dropped as a result of the investor fear. Then, employing a set of on-chain mint and burn mechanisms, UST, a so-called algorithmic stablecoin, collaborated with LUNA to preserve its peg to the dollar.
In the second quarter of last year, the assets owned by Tether lost nearly 20% of their value.
Now, the story seems to be turning in its favour. After gaining from this year’s financial unrest, which placed pressure on rivals like Circle’s USD Coin and the surge that increased the value of the leading cryptocurrency Bitcoin by more than 65%, Tether is now recouping its losses.
Tether also seems to have profited from the current pattern of banking institutions rejecting crypto customers while positioning itself as a competitive alternative.
This year, state authorities and the U.S. Securities and Exchange Commission have increased their enforcement efforts. After opposition from New York and the SEC on regulatory grounds, Paxos Trust Co. stopped releasing its BUSD stablecoin bearing the Binance brand. According to CoinMarketCap, the market capitalization of BUSD has dropped by more than 60% since the beginning of the year.
