Data Research | USDT Market Cap Hits All-Time High, While Trading Volume Drops to Multi-Year Low

The research firm Kaiko has put forth several observations in its latest data report, stating that the market capitalization of USDT has returned to pre-Terra collapse levels and reached a new high, but trading volume on centralized platforms has dropped to the lowest point since 2021. Additionally, it mentioned that Binance US has seen a significant decrease in market share, and SushiSwap has only a tiny fraction of its market share left.

Low Trading Volume, High Market Value - Who's Using USDT?

Tether's Market Value Reaches New Highs

CoinMarketCap data shows that the market value of USDT has reached $82.934 billion, with an increase of approximately $15 billion (24.77%) since the beginning of the year.

Its market value has surpassed the $82.467 billion before the collapse of Terra last year, setting a new historical record.

Low CEX Trading Volume, Why the High USDT Value?

USDT is mainly used on centralized exchanges (CEX) as shown in the image below.

Kaiko's question is, why can the market value of USDT continue to grow despite the low trading volume on CEX?

In the image below, the trading volume after 2023 has decreased, showing an inverse relationship with the growth of USDT's market value, with the trading volume even shrinking back to the early stages of the bull market in 2021.

Extending the previous image, the correlation between USDT trading volume and market value has also shown a negative correlation since the beginning of this year, or approaching zero as shown in the image below.

Kaiko believes the only explanation is that BUSD was targeted by regulators in February this year, and USDC was affected by the banking crisis, leading to the increase in USDT's market value during the bear market:

• BUSD Event Summary｜Is Stablecoin a Security? Regulatory Requirement to Halt Issuance? Binance's Zhao Changpeng Response? Relationship with USDC?

• Circle Pressure Test Ends｜Over the Past Three Days, $3 Billion USDC Destroyed, Circulating Supply Decreased by about 8%

Dramatic Difference in USDC Market Value Changes

Unlike USDT, the market value of USDC changes "in accordance with the volume of trades."

This is also why Kaiko doubts the significance of "USDT's market value hitting an all-time high."

Binance.US Market Share Halved

Binance.US launched zero trading fees for certain Bitcoin trading pairs in the middle of last year, coupled with the collapse of FTX, leading to a significant increase in Binance.US's market share in the U.S., from 8% in 2023 to 21%.

Perhaps due to recent regulatory pressures faced by exchanges such as Binance and Coinbase, as well as the cancellation of fee discounts, Binance.US's spot trading volume has been declining since March this year, dropping by over 50% since the last week of April.

Understanding SushiSwap's Miniscule Market Share in One Image

Kaiko points out that SushiSwap's market share, as shown in the image below, is less than 1% of Uniswap V3, even though the meme coin frenzy favors DEX, SushiSwap remains insignificant.

SushiSwap's main advantage lies in multi-chain deployment and token yield applications higher than UNI, but as Uniswap also actively deploys on various chains and overall DeFi rates plummet, SushiSwap's influence gradually diminishes.

The image below shows that Uniswap V3 dominated the market share shortly after its launch in 2021, while the departure of SushiSwap's core leader Maki further led to a decline in market share.