3 Reasons Tether Is Profiting For USDC Stablecoin Below $50 Billion Market Cap
The market cap of USD Coin (USDC), a stablecoin issued by US-based payment technology firm Circle, has fallen below $50 billion for the first time since January 2022.
On a weekly chart, the USDC market cap, which reflects the number of USD-backed tokens in circulation, fell to $49.39 billion on Sept. 26, a record high established just three months ago. down nearly 12% from $55.88 billion in 2018.
In contrast, the market cap of Tether (USDT) was at risk of losing its top position to USDC in May, surpassing $68 billion on Sept. 26 before hitting a May 2022 high of 823. It is down 17.4% from $300 million.
The divergence between USDT and USDC indicates that investors are increasingly favoring the former. Let’s take a look at what made Tether the top stablecoin.
Binance USDC Suspension
Binance, the world’s largest cryptocurrency exchange, announced in early September that it would convert users’ USDC balances into its own stablecoin, Binance USD (BUSD). The conversion will start on September 29th and will not apply to USDT.
The exchange said it hopes to “increase user liquidity and capital efficiency” through what it sees as a forced conversion in the increasingly competitive stablecoin sector. As a result, Binance suspended his USDC spot, futures and margin trading.
8/ 1. Binance’s forced “automatic conversion” is a typical fintech blatant monopoly
They are no better than traditional banks with the power to freeze or control user funds
Where is the decentralized future #Web3 Was the user promised?
— Momentum 6 (@Momentum_6) September 21, 2022
USDC’s market cap has plummeted by $9.5 billion since the announcement.
Following in Binance’s footsteps, the India-based cryptocurrency exchange has also suspended USDC deposits since September 26.
Related: Binance: No plans to auto-convert Tether, but ‘may change’
After the Terra debacle, whales dump USDC
Data collected by Glassnode shows USDC supply support by the top 1% addresses (aka whales) fell from a year-to-date high of 93.84% in February to 88.36% in September.
Interestingly, after Terra, a $40 billion “algorithmic stablecoin” project, collapsed in May, the plunge accelerated, fueling negative sentiment about the stablecoin industry as a whole.
For example, according to CryptoQuant, the total market cap of all stablecoins will see its worst correction in 2022, dropping from a February high of $97.37 billion to $80.65 billion in September. Did.
tornado cash sanctions
The plunge in USDC market cap has also accelerated after the U.S. Treasury Department imposed sanctions on cryptocurrency mixing service Tornado Cash over money laundering concerns.
Circle responded to the sanctions by freezing all USDC wallets owned by Tornado Cash. The company also blocked addresses that may be associated with banned mixing services from using his USDC. In contrast, Tether avoided blacklisting his Tornado Cash address.
Independent markets analyst Geralt Davidson treated the Circle’s response to the Tornado Cash sanctions as a clue that holdings in USDC are riskier than their stablecoin rivals.
“People now realize that holding USDC is more risky.The Circle has blacklisted all USDC in Tornado Cash addresses licensed by the US Treasury Department. I got it August 2022, added:
USDC appears to be the only token to be blacklisted, but other ERC-20 tokens were not.
Davidson too It has been processed Tornado Cash as one of the reasons USDC whales have been dumping stablecoins in recent months.
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3 Reasons Tether Is Profiting For USDC Stablecoin Below $50 Billion Market Cap
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