Intense rivalry foreseen in the market by JPMorgan
In the rapidly evolving world of cryptocurrencies, the stablecoin market is witnessing an intense competition that could reshape its landscape. Tether, the issuer of the world's largest stablecoin USDT, is planning to introduce a stock market regulation-compliant stablecoin called USAT. This move, if successful, could potentially pose a significant threat to established players like Circle.
Experts have cautioned that without significant growth in the overall stock market today, the competition in the stablecoin market could become a "zero-sum game." The situation for Circle, a dominant player in the market, is becoming increasingly dire due to the pressure from Tether and the aggressive ambition of fintechs like Robinhood and Revolut.
Tether's strategic move to store the reserves for USAT at Anchorage Digital, an institution with an official banking license, could give Tether an edge in terms of institutional trust and risk management. This could significantly strengthen institutional trust and reduce risks, making USAT a formidable contender.
JPMorgan analysts have also warned of intense competition that could challenge Circle's dominance in the stablecoin market. According to JPMorgan, Hyperliquid's futures exchange is currently responsible for around 7.5% of total USDC usage. Hyperliquid plans to introduce its own stablecoin (USDH), which could displace USDC from Hyperliquid's platform.
Robinhood and Revolut, with their millions of users, are reportedly developing their own stablecoins. If these stablecoins gain traction, they could potentially pose a significant threat to established stablecoin providers.
St. Cloud Financial Credit Union (Minnesota), Rezolve AI, Dakota, Blue Gold Limited, and others are also working on their own stablecoins. These new entrants, if successful, could further intensify the competition in the market.
The stablecoin market has grown to a considerable $278 billion, but its share of the total crypto market capitalization has been stagnant below the average of eight percent since 2020. This stagnation, coupled with the intensifying competition, has led some analysts to advise investors to stay on the sidelines.
However, Tether hopes to achieve lower costs and higher profit margins through direct control of the reserves for USAT. This could give Tether a competitive advantage, making USAT a coin to watch in the coming months.
In conclusion, the stablecoin market is witnessing an intensifying competition. Established players like Circle are facing pressure not only from the industry leader but also from smaller players. The success of new entrants like Tether's USAT, Robinhood's and Revolut's stablecoins, and others could reshape the landscape of the stablecoin market. Investors should closely monitor these developments to stay informed and make informed decisions.
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