Since the year’s outset, the stablecoin sector has significantly transformed. The two leading stablecoins, Tether’s USDT and Circle’s USDC, have experienced diverging trajectories in a market still reeling from the implosion of Terra’s UST last year.
USDT has seen its supply steadily escalate to fresh record levels. In contrast, USDC’s market presence has waned amidst growing skepticism over its reserves, particularly after the downfall of Silicon Valley Bank (SVB) in March.
USDC’s Volume Hits a Two-Year Low
Insights from renowned blockchain analytics company Glassnode reveal that a month after the SVB debacle, USDC’s on-chain volume on Ethereum plummeted to its lowest in two years.
Although there has been a modest rebound, the volume remains 50% below its levels from the week preceding the SVB crisis, temporarily destabilizing USDC’s peg.
Moreover, USDC’s circulating supply took a substantial hit due to these events. From March onward, the stablecoin’s supply nosedived by 37%, settling at $26.32 billion, prompting investors to seek refuge in other stablecoin alternatives.
Yet, in the face of these setbacks, Coinbase remains undeterred, championing USDC by making its transactions instantaneous and waiving gas fees, aiming to bolster its user base.
USDT Capitalizes on Rival’s Woes
Conversely, Tether’s USDT has seized USDC’s tribulations, solidifying its status as the market’s predominant stablecoin.
Data from Glassnode elucidates that Tether’s market cap has swelled by approximately 30% year-to-date, at an impressive $83.80 billion. This assertion finds corroboration in the analysis of BeInCrypto’s Global Head of News, Ali Martinez. He indicated that USDT’s market dominance has surged to 68.87%.
Beyond just expansion, Tether’s growth has translated to substantial earnings. The first quarter saw the firm pocketing $1.50 billion net profit, with whispers of channeling these gains into Bitcoin investments.
Stablecoin Market in a Downtrend
Despite USDT’s ascendancy, the broader stablecoin market exhibits a downward trajectory. As per Kaiko, the collective market capitalization of stablecoins receded by 7% in the year’s first half.
CCData echoes this sentiment, noting an uninterrupted 16-month decline since the debacle of Terra.
Nonetheless, the stablecoin horizon is not entirely bleak. A new generation of decentralized stablecoins is carving a niche for itself.
Prominent DeFi players like Curve Finance, Aave, and MakerDAO have rolled out their proprietary DeFi-centric stablecoins. These projects aim to draw new users and amplify their revenue streams.
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