For a long time, Tether was the biggest stablecoin on the market. Its market capitalization sent it to the top 10 crypto assets. The importance of Tether has also become even more emphasized with the fall of Terra’s UST. But USDC, another major stablecoin, is starting to make headway. In fact, data shows it could replace Tether despite growing skepticism about it. Here are some important points:
Total USDC supply increased month after month
USDC has also seen its market capitalization jump 1000% since January.
USDT, on the other hand, saw the most redemptions in May
Data Source: TradingView
Is USDC taking over?
Well, so far USDC has yet to reach the same level as Tether. But it seems that the fall of the UST has greatly accelerated the adoption of USDC. Take this for example. At the start of the year, USDC had a market capitalization of around $4.1 billion. Today, the stablecoin has a market cap of over $55 billion. It’s almost 10 times higher than before.
Additionally, while USDC has signaled this growth, USDT on the other hand has seen a record number of redemptions over the past few weeks. In fact, USDT redemptions reached -$13 billion in May alone. Now, these signs indicate that investors’ appetite for USDC is growing. If this trend continues, the coin will be much closer to USDT by the end of the year.
Are there risks of USDC de-anchoring?
When Terra’s UST broke away from the dollar, it was largely the beginning of the end for the stablecoin. There are also fears that other dollar-pegged coins, including USDC, could suffer the same fate.
However, at this time, we see no immediate risk of a USDC unpeg. In fact, even during crypto’s toughest months, USDC has maintained its peg quite impressively.