Tether (USDT) Faces Biggest Drop Since FTX Amid MiCA Pressure
- USDT records 1,1% drop due to MiCA.
- MiCA pushes USDC as an alternative in the European market.
- Limited Impact: Asia Leads USDT Trading Volume.
The stablecoin market was rocked this week with Tether (USDT), the leading dollar-pegged cryptocurrency, recording its biggest weekly market cap drop since the collapse of the FTX exchange in November 2022. Data shows that USDT's market cap fell 1,1% to $137,24 billion, after peaking at $140,72 billion in December.
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But Axel, what about USDT trading volume and the depeg?
USDT is the largest stablecoin, with a market cap of $138.5B and a daily trading volume of $44B
As of today, 80% of USDT's trading volume comes from Asia, so the EU delisting won't have any severe impact. pic.twitter.com/NjxB2iVLhe
— Axel Bitblaze 🪓 (@Axel_bitblaze69) December 29, 2024
This significant reduction comes in line with the full implementation of Europe’s Markets in Crypto Assets (MiCA) regulation, which came into effect on Dec. 30. The new regulation requires issuers of stablecoins like USDT to obtain specific licenses to operate within the European Union. Some exchanges, including Coinbase, have opted to remove USDT from their platforms, citing compliance concerns.
While regulations restrict the use of stablecoins on centralized exchanges in the European bloc, traders can still hold USDT in non-custodial wallets. However, the asset’s delisting from trading platforms has sparked speculation on social media about the broader impact on the cryptocurrency market.
However, experts believe that MiCA’s impact on USDT will be limited geographically. “USDT’s delisting due to MiCA regulation will not harm its dominance,” said Karen Tang, head of partnerships at Orderly Network. According to her, USDT’s largest trading volume occurs in Asia and the United States, reducing Europe’s relevance in this context.
Analysts like Bitblaze reinforce this view, noting that 80% of USDT’s trading volume is generated in Asia. Furthermore, the global stablecoin market remains robust, with USDT playing a crucial role as a liquidity medium and trading tool.
Meanwhile, the USDC stablecoin, issued by Circle, benefits from the restrictions imposed on USDT. Thanks to its compliance with MiCA regulations, USDC has seen its market cap increase by $1,7 billion in recent weeks, in contrast to its competitor’s decline. However, USDT remains the leader in the stablecoin market, with a market cap of $137,3 billion, while USDC ranks second with $43,7 billion.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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