Some people predicted that Tether would be dethroned by the USDC stablecoin following the Terra-LUNA crisis and liquidity problem (USDT). The market cap, however, has dropped from a peak of $55.90 billion at the end of July to $49.45 o
Some people predicted that Tether would be dethroned by the USDC stablecoin following the Terra-LUNA crisis and liquidity problem (USDT). The market cap, however, has dropped from a peak of $55.90 billion at the end of July to $49.45 on September 26.
Tether and USD Coin (USDC) win the race (USDT)
Following the Terra-LUNA catastrophe and the DeFi liquidity issue, stablecoins have lost their lustre. Additionally, there has been a lot of pressure due to growing regulatory load, dangerous reserve backing, and censorship dangers. While Circle's USDC stablecoin continues to lose market share to Tether, the absence of censorship resistance is the main cause of the decline.
Circle instantly froze all USDC on cryptocurrency mixer Tornado Cash after the Office of Foreign Assets Control (OFAC) of the US Treasury approved Tornado Cash. Due to this, whales lost faith in USDC, and DeFi titans like MakerDAO unwound USDC collateral to another stablecoin that is censorship-resistant.
Tether did not freeze USDT assets during this time, and the market capitalization has since risen. The market capitalization of USDT has risen to around $68 billion. According to CoinGabbar, the circulation of USDC has decreased 5.3% during the past 30 days while the circulation of USDT has climbed by 0.4%.
Additionally, WazirX and Binance will convert USDC funds to BUSD after delisting USDC. In order to improve liquidity and capital efficiency, Binance stopped spot, futures, and margin trading in USDC in the first few days of September. Since then, the USDC market cap has decreased. The 30-day circulation of Binance USD (BUSD) has climbed by 10%, according to CoinGabbar.
By trading volume, Binance is the biggest cryptocurrency exchange on the planet. The trading volume of that coin is greatly impacted by any delisting by the exchange. Even Robinhood's announcement that it would support USDC couldn't halt the market cap drop.
Below $50 billion in USD Market Cap
Experts think that because of the Federal Reserve's aggressive rate hikes, the stablecoin market faces liquidity issues. Furthermore, the IMF has issued a warning that stablecoins might trigger another crypto winter.
As USDC's future is still unclear, the cryptocurrency market has shifted toward other stablecoins like USDT and BUSD.