Consistent Discounts on Tether’s Stablecoin
Recent data from financial analytics firm Kaiko has highlighted a persistent trend in the stablecoin market. Tether’s euro-pegged stablecoin, known as EURT, has been trading at a discount relative to the euro since November of the previous year. This ongoing issue has made it challenging for EURT to remain competitive, especially when compared to Circle’s equivalent offering, the EURC stablecoin.
Circle’s EURC Gains a Competitive Edge
While Tether struggles, Circle’s EUR Coin has enjoyed a premium status for several consecutive months, indicating a healthy demand for this particular asset. In contrast, the EURCV stablecoin, launched by Société Générale, has managed to retain its value close to the euro since its inception in early December 2023. However, the market for euro-pegged stablecoins is still quite fragmented.
Market Fragmentation and Volatility
Kaiko’s analysis reveals that EURT is primarily exchanged on offshore platforms such as HTX and Bitfinex. On the flip side, EURC has found its stronghold within decentralized exchanges. The fragmentation in the market is believed to contribute to the volatility observed in the values of these stablecoins.
Market Concentration Among Exchanges
Despite the presence of multiple players in the euro-pegged stablecoin arena, the market is heavily concentrated. A mere five cryptocurrency exchanges — Bitvavo, Kraken, Coinbase, Bitstamp, and Binance — are responsible for a staggering 98% of the total euro trade volume. These platforms are the titans of euro-denominated transactions.
Correlation Between Volume and Trading Pairs
An interesting observation made by Kaiko analysts is the direct correlation between the volume of euro trades and the number of euro-denominated trading pairs offered by an exchange. Exchanges such as Kraken and Bitvavo, each boasting over 200 euro pairs, have the highest euro trade volumes. This is in contrast to global exchanges like Bitflyer and Bybit that cater to the APAC region and add to the overall diversity of the market.
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