Ripple’s XRP has flipped Tether’s USDT stablecoin to claim its spot as the third-largest crypto coin by market cap. The coin now only trails behind Bitcoin and Ethereum.
According to on-chain data from CoinGecko, XRP’s market cap surged to $137.68 billion on January 6, surpassing USDT, which has endured a $1.6 billion decline in market cap since December 30. This coincides with the rollout of the European Union’s Markets in Crypto-Assets (MiCA) regulation.
At press time, USDT’s market cap stands at $137.15 billion. As much as Ripple’s native coin has taken third place, it has lost 2.24% market share in the last month.
XRP’s market price the last month – Source: CoinMarketCap
At the time of publication, XRP trades at $2.38, up 15% in the last 7 days, according to CoinGecko. Over the past year, the token has risen nearly 320%.
This flip may not last as the market’s volatility tends to fluctuate in both directions over the long haul. At the moment, USDT is struggling with significant fear, uncertainty, and doubt (FUD).
XRP gains the most from the Trump rally
XRP has gained the most since Trump took office. However, the coin remains 29.9% lower than its $3.40 all-time high, which it achieved seven years ago.
Before Donald Trump won a second term in the White House, XRP was trading around 50-60 cents. The next big catalyst for XRP and other cryptos could be DJT’s first days in office, starting on January 20.
On the other hand, Ripple unlocked another 500 million XRP tokens from its escrow account as a part of Ripple’s monthly schedule to manage the token supply.
There was a cryptic message referencing Trump’s upcoming inauguration embedded in Ripple’s latest transaction.
This is not the first time that XRP has flipped USDT. On December 1, XRP surpassed both Solana and USDT in market capitalization rankings.
XRP ETFs in play
The anticipation surrounding a spot XRP exchange-traded fund (ETF) has further propelled XRP’s momentum. On December 2, WisdomTree filed for a spot XRP ETF with the US Securities and Exchange Commission (SEC), becoming the fourth company to do so, alongside Bitwise, Canary Capital, and 21Shares.
Bitwise and 21Shares were part of the earliest to file for spot Bitcoin ETFs back in January 2024.
XRP’s significant price movement comes about as Ripple Labs introduces Ripple USD (RLUSD), a stablecoin backed by the US dollar, on December 17. The stablecoin is scheduled to be integrated into Ripple Payments in early 2025, aiming to enhance cross-border transactions for enterprise clients.
According to CoinGecko, RLUSD has already reached a market capitalization of $72 million.
RLUSD market cap. Source: CoinGecko
These sentiments are helping to uplift XRP overall, as showcased in the price boom that persisted for most of the fourth quarter. The coin reclaiming the third spot might be the beginning, with bigger price forecasts ahead.
Why has USDT lost its position?
Despite the recent price surge, on-chain data aggregates show market sentiment has yet to recover from the US Federal Reserve-induced bearish headwinds in the second half of December.
This is not the only problem USDT has. The decline in USDT’s market share coincides with the implementation of stricter regulations for stablecoin issuers under the MiCA framework. Stablecoin issuers are mandated to uphold full reserves and secure licenses for operation within the European Union.
In addition, on December 13, Coinbase Europe removed USDT from its listings, citing a lack of compliance with MiCA regulations. European regulators have not yet confirmed if USDT is in full compliance with the MiCA regulations.
Despite the decline, Tether continues to dominate the stablecoin market.
USDT accounted for 66.69% of the $204 billion stablecoin market in December, according to DefiLlama data. USDC, Coinbase’s second-largest stablecoin, trails behind with a market capitalization of $44 billion.
In 2018, Coinbase and Circle collaborated to launch USD Coin, with the exchange holding an equity stake in Circle. In March 2023, USDC fell below its $1 peg following the collapse of Silicon Valley Bank.
USDT stablecoin market share. Source: DefiLlama
Tron continues to see the most USDT activity, accounting for 53.8% of addresses. USDC, on the other hand, shows the highest traction on Solana, where 30% of its users are located, followed by Ethereum layer-2 Base at 6.5%.
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