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Tether (USDT) Reports Historic Quarterly Profit of $4.52bn Despite Declining Market Share

Last Updated May 2, 2024 4:21 PM
Eddie Mitchell
Last Updated May 2, 2024 4:21 PM
Key Takeaways
  • USDT has almost doubled its profits since Q4 2023.
  • Its net equity has reached $11.37bn, up from $7bn in Q4 2024.
  • Tether is slowly its market share dominance to USDC, FDUSD, and others.

Stablecoin giant Tether (USDT) has just obliterated its former quarterly profit records with an all-time high of $4.52 billion so far in 2024.

Although its profits have near-doubled in Q1, Tether’s dominance as the no.1 stablecoin appears to be at risk of decline.

A Record-Breaking Q1

As per an attestation report from auditing firm BDO, Tether has hit a record profit of $4.52 billion, smashing its prior all-time high of $2.85 billion recorded in Q4 2023.

Tether’s entire reserves total a staggering $115.41bn. As of March 31, 2024, Tether exceeded $90bn in U.S. Treasury bonds held directly and indirectly, from which the audit found it gleaned $1bn of its profits.

The majority of its Q1 2024 profits came from positions in Bitcoin (BTC) and gold, which have both had impressive solid market performance in recent months.

More specifically, Tether holds over $1.8bn in cash and cash equivalents, a further $5.37 billion in BTC, and $3.65bn in gold. It’s important to note that Tether also issues a gold-backed stablecoin, Tether Gold (XAUT), which would explain its substantial gold holdings.

Demand in Decline?

USDT appears to be losing its market share on centralized exchanges (CEXs). As per Kaiko, its dominance has declined from 82% to 69% year-to-date (YTD).

In Q1 2024, USDT faced stiff opposition from newcomer First Digital USD (FDUSD), which received a major boost from Binance’s zero-fee trading promotions.

Additionally, Ethena’s rather unique “digital dollar” USDe also impacted USDT’s dominance with substantial adoption stemming from its attractive interest rates.

Most notably, Tether’s main competitor, USD Coin (USDC) from Circle, has seen its market share increase 11%, which stood at a mere 1% just four years ago in 2020.

Stablecoin Competition Ramps Up

To some, the dominance of USDT and its questionable history was sometimes viewed as another ticking timebomb that would bring the crypto markets down with it, should it fail.

CCN recently reported that USDC has so far outpaced USDT this year with $456bn in trading volume. Compared to Tether’s $89bn, it appears as though the times are changing in crypto.

With Stripe re-entering the crypto payments space, and choosing to integrate USDC as their stablecoin payment of choice, the gap between USDC and USDT could shrink significantly this year.

Perhaps this is a sign of the market maturing. As we’ve seen in traditional finance and crypto settings, a single entity dominating major portions of the market isn’t exactly a good thing.

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