<\/p>\n
The market capitalization of USDC is roughly half of what it was a year ago \u2014 and sinking. <\/p>\n
Issued by crypto payments company Circle, usdc<\/a> is a stablecoin pegged to the US dollar. With USDC reserves held in custody by BlackRock, BNY Mellon and other financial institutions, according to the company, a holder of the asset can redeem one USDC for $1.<\/p>\n USDC’s market capitalization peaked around $55 billion in late July 2022 and subsequently dropped to about $44 billion by early March of this year, according to data from CoinGecko. From there, it began a steeper decline triggered by the insolvency of Silicon Valley Bank<\/a>Where Circle had deposited<\/a> $3.3 billion of reserves. Circle later regained control of those funds after SVB received a federal bailout.<\/p>\n But the hiccup caused the stablecoin to de-peg temporarily<\/a> to about $0.97, a scenario that led to a lasting loss in credibility for some, according to industry watchers. <\/p>\n \u201cThe rapid reduction in price caused token-holders to immediately lose trust in the stability of USDC resulting in billions of dollars of redemptions in the weeks after,\u201d said CoinShares researcher Max Shannon. \u201cWhat token holders may not have realized amidst their fear and worry was that Circle handled the redemptions with ease, but also they paused withdrawals on the weekend.\u201d <\/p>\n The withdrawal halt was not due to illiquidity, but rather because of Circle’s ties to the traditional banking system, Shannon said. He added that although USDC can be used on-chain all the time, Circle is observed to five-days-a-week business hours.<\/p>\n The market cap of USDC was roughly $26.7 billion Tuesday, down about 2.5% since the start of July, CoinGecko data shows. <\/p>\n A Circle spokesperson did not immediately return a request for comment. <\/p>\n As noted by Matteo Greco, a research analyst at Fineqia International, USDC’s main market is the US \u2014 a country where crypto players are navigating legal challenges<\/a> in the absence of comprehensive regulation. <\/p>\n \u201cThe strong actions perpetrated by the SEC against the digital asset space are driving investors away from the US market and consequently USDC has been hit as well,\u201d Greco told Blockworks. <\/p>\n The continued decline in USDC circulating supply and market cap can be directly attributed to stablecoin rival tether (usdt<\/a>, “eating his lunch,”<\/a> according to Shannon. <\/p>\n Read more:<\/strong> Months After De-Pegging Event, USDC Continues to Lag Behind Tether<\/a><\/p>\n \u201cTraders initially rotated out of their positions as they knew Tether had no custodial risk within the American banking system and did not de-peg,\u201d he told Blockworks in an email. “But the long-term trend is increasing deep liquidity.”<\/p>\n USDT’s market cap was nearly $84 billion Tuesday, behind only bitcoin (BTC<\/a>) and ether (eth<\/a>, That figure has grown roughly 27% from $66 billion since July 2022. <\/p>\n Tether has been the outlier, as have other major stablecoins \u2014 including Binance USD (USD<\/a>) and Dai (dai<\/a>) \u2014 have seen a 50% drop, or more, from their respective record market capitalizations.<\/p>\n Although some have been skeptical as to how exactly, and to what extent, Tether is backed, the stablecoin’s circulating supply growth cannot be questioned, Greco said.<\/p>\n \u201cTether is fully minted on-chain and so the supply itself is tamper proof,\u201d he noted.<\/p>\n Tether holds “a strong, conservative, and liquid portfolio” that comprises short-term US Treasuries, as well as cash and cash equivalents, a company spokesperson told Blockworks in March<\/a>, <\/p>\n Stablecoins are chiefly used for trading, comprising the deepest liquidity pools across all major exchanges, Shannon said. They also act as a safe haven in a risk-off environment when trading alt coins, he added.<\/p>\n Despite the 50% decrease in supply for USDC over the past year, Greco said, USDC remains the top choice for many institutions. <\/p>\n \u201cIt is strongly preferred as a bridge between the real world and the digital asset space when it comes to a regulated environment,\u201d he said. \u201cUSDC is widely used in all those protocols that tokenize real world assets such as stocks, bonds, houses or luxury goods.\u201d<\/p>\n While USDC is used mainly by the US market, USDT dominates in Asia \u2014 a region warming up to stablecoins<\/a>, Tether, which has been around since 2014, is also favored by crypto natives who use it largely for daily trading and in DeFi to provide liquidity, Greco said. <\/p>\n Added Greco: “It is also the preferred asset for native crypto investors to use when exiting the market and going into a neutral strategy without sending money back to a bank account.”<\/p>\n Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter<\/a> now.<\/strong><\/p>\n Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief<\/a>,<\/strong><\/p>\n Can’t wait? Get our news the fastest way possible. Join us on Telegram<\/a> and follow us on google news<\/a>,<\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" The market capitalization of USDC is roughly half of what it was a year ago \u2014 and sinking. Issued by crypto payments company Circle, usdc is a stablecoin pegged to the US dollar. With USDC reserves held in custody by BlackRock, BNY Mellon and other financial institutions, according to the company, a holder of the […]<\/p>\n","protected":false},"author":2,"featured_media":127346,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[230,225,221,227,226,228,229,60,223,224,222],"class_list":["post-127345","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-brave","tag-coinbase","tag-crypto","tag-decentralised","tag-decentralized","tag-decentralized-exchange","tag-erc-20","tag-featured","tag-meme-coin","tag-robinhood","tag-solana"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/127345","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=127345"}],"version-history":[{"count":1,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/127345\/revisions"}],"predecessor-version":[{"id":127347,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/127345\/revisions\/127347"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/127346"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=127345"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=127345"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=127345"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Tether supply growth<\/h2>\n
Use cases vary<\/h2>\n
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