The market capitalization of Tether (USDT) surpassed that of XRP this week.
The dollar-pegged stablecoin is now the third-largest cryptocurrency.
Macro factors led the demand for USDT higher, including traders’ flight-to-cash amidst the fast-spreading novel Coronavirus pandemic.
Tether has replaced XRP, the native token of the San Francisco-based blockchain payment firm Ripple Labs, to become the third-largest cryptocurrency by market capitalization.
Top cryptocurrency tokens by market cap as on April 22 | Source: Messari.io
The dollar-pegged stablecoin, which protects traders from the extreme volatility associated with Bitcoin and similar crypto-assets, saw its reported valuation surpassing $7.5 billion on Wednesday. Meanwhile, the size of the XRP market squeezed under $5.5 billion as its prices fell into negative territory on a year-to-date timeframe.
Tether Demand Up
The rise in Tether’s market capitalization followed a voluminous flight to cash in the first quarter of 2020. Data aggregator Messari wrote in a client note that demand for stablecoins, especially USDT, was as high as it was in the entire 2019, indicating that traders anticipate wilder price volatility in the rest of the crypto market.
The sentiment takes cues from the ongoing macroeconomic crisis caused by the Coronavirus pandemic. As equities and commodities crashed to their record lows in mid-March, they also prompted bitcoin and other digital assets to pursue a similar downward trajectory.
The crypto market capitalization on whole fell by circa $60.25 billion in March 2020.
Crypto market cap is recovering following global central banks’ stimulus programs | Source: TradingView.com
XRP was one of the victims of the March crash, falling 24.32 percent to close the month at circa $0.17. On the other hand, traders’ appetite for Tether, the topmost stablecoin, surged, making it the top crypto beneficiary of the Coronavirus pandemic.
“The largest beneficiary of the March volatility was Tether,” said Ryan Watkins, research analyst at Messari. “It’s fitting that the top 3 crypto assets now feature the top 3 verticals in blockchain technology: Money, DeFi, and Stablecoins.”
At the same time, Mr. Watkins anticipated the demand for stablecoins to head higher as the world comes face to face with a US dollar shortage. He said USDT, as well as its competitors, including USDC and BUSD, could quadruple their growth in 2020.
“With the announcement of Libra and the growth of stablecoins last year, many consider 2019 as the year of stablecoins,” said Ryan Watkins, research analyst at Messari. “But if trends from the past quarter persist, 2020 could very well give 2019 a run for its money.”
Photo by Maico Amorim on Unsplash