Ethereum has been enjoying its second place in the cryptocurrency market cap rankings for quite a few years now, but its position could be threatened by a pretty unlikely challenger – Tethers USDT stablecoin.
Even though USDT is widely popular, it isnt discussed as often as other cryptocurrencies because its price pretty much always hovers around $1. The true measure of the growth of USDT is its market capitalization, which essentially tells us how many USDT tokens are in circulation. This figure has seen immense growth in 2020 and is likely to continue on its trajectory in 2021 as well.
Bloomberg analyst Mike McGlone made the case for Tether surpassing Ethereum in the Bloomberg Crypto Outlook report for Q4 2020. In the report, McGlone wrote why Ethereum could lose its number 2 spot to Tether:
Indicating demand for a digital version of gold (Bitcoin) and a crypto-asset like the dollar, if current trends prevail, the market cap of Tether may surpass Ethereum next year. Increasing adoption of stable coins is likely a precursor for central bank digital currencies and promises to be more enduring than alt-coin speculative excesses.
Bloomberg analyst Mike McGlone
McGlone elaborated on this prediction, saying that Ethereums market cap has been stagnant since 2017, while USDT is seeing rapid growth. He also added that one of the drivers for Tethers growth is the aftermath of the cryptocurrency bubble of 2017, particularly indicating that the still-deflating broad crypto-asset bubble from 2017 is migrating assets toward Tether.
According to McGlone, the rise of stablecoins is an indicator that it is just a matter of time before central bank digital currencies (CBDCs) become a reality.
As stablecoins rise, can Tether surpass Ethereum in market cap?
As per cryptocurrency data aggregator CoinCodex, the Ethereum market cap is currently $43.5 billion compared to U ...