Tether’s USDT, the world’s leading dollar-pegged stablecoin, recently experienced its sharpest weekly market cap drop in two years, raising concerns about potential market volatility in the crypto space.
According to TradingView data, USDT’s market capitalization declined by over 1% this week, falling to $137.24 billion. This marks the most significant drop since the collapse of the FTX exchange in mid-November 2022. At its peak in mid-December, USDT reached an all-time high market cap of $140.72 billion.
The recent decline followed decisions by several EU-based exchanges and Coinbase to delist USDT. These moves align with compliance requirements under the EU’s Markets in Crypto-Assets (MiCA) framework, which took full effect on December 30. MiCA regulations for stablecoins—cryptocurrencies pegged to real-world assets like the US dollar—had already been in force for six months.
MiCA mandates that issuers obtain licenses to publicly offer or trade asset-referenced tokens (ARTs) and e-money tokens (EMTs) within the EU. ARTs are cryptocurrencies that aim to maintain stable value by referencing other assets such as gold, other cryptocurrencies, or a combination of both. EMTs, like USDT, are pegged to a single national currency.
While EU-based traders can still store USDT in decentralized wallets, trading it on MiCA-compliant centralized exchanges is no longer an option.
USDT serves as a gateway to the cryptocurrency market, widely used for purchasing spot crypto assets and engaging in derivatives trading. The delisting and declining market capitalization have fueled speculation about broader market downturns.
However, experts argue that the impact of these developments may be limited to the eurozone, highlight that the EU is not the largest cryptocurrency market globally. Instead, the majority of crypto trading volume occurs in Asia and the United States.
Bitforum Insight: What This Means for Crypto Enthusiasts
At Bitforum Network, we strive to provide insights and updates that empower crypto enthusiasts and investors to navigate this ever-evolving landscape. While regulatory challenges like MiCA may reshape trading dynamics in specific regions, the global nature of cryptocurrency ensures that innovation and opportunities continue to thrive in markets like Asia and the US.
Join the conversation on Bitforum to stay informed about market trends, regulatory shifts, and investment strategies in the crypto world. Whether you’re a seasoned investor or new to the space, Bitforum is your hub for learning, sharing, and staying ahead in the digital finance era.
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