The sand is shifting in the stablecoin ecosystem, with Circle’s USD Coin quickly eating up the dominance of the industry’s leader, Tether.
According to a February 1 report From Glassnode, USDC on exchanges rose more than 112% in January alone, from $ 431 million to more than $ 915 million.
Since the beginning of the year, about $ 1 billion in new USDC has been hit – more than 90% of which has been sent to centralized exchanges.
Worth almost half a billion USDC Glassnode, which makes its way to exchanges within a month, speculates that traders plan to mobilize the tokens to buy up upcoming dips in the crypto markets:
“This high number should boost investor confidence in any dips that are bought up quickly, turning it into a bullish signal.”
USDC growth in January may have been boosted as Circle introduced a stablecoin-to-fiat bridge to make this happen seamless transfers from USDC to USD last month.
Since the beginning of 2020, Circle’s stablecoin supply has increased by more than 900% from just over 500 million to 5.1 billion according to business statistics.
In contrast, the amount of Tether in circulation has increased by about 500% over the same period. However, Tether’s recent capitalization increase represents more than four times the fiat value of USDC’s growth over the past 13 months.
The third largest stablecoin in circulation is MakerDAO’s Dai, which has grown in capitalization by a whopping 3,800% from just $ 40 million in January 2020 to more than $ 1.6 billion today. Binance’s stablecoin, BUSD, also saw significant growth with a 600% increase in supply over the same period to currently capitalization of $ 1.4 billion.
With rival stablecoins recently outpacing Tether’s growth, USDT’s stablecoin dominance has dropped below 75% for the first time, according to Coin Metrics.
The decline in market share in Tether’s stablecoin can be somewhat attributed to the company ongoing legal problems with the Attorney General of New York, which could potentially prompt traders to look for alternative stable tokens to protect against the risk of USDT losing its peg during the procedure. Tether has lost its pin several times in recent memory, falling to $ 0.96 on January 5, 2021. October 2018.
The chain may come under further stress if the new ‘Stable law‘are passed by US lawmakers. If the bill passes, stablecoin issuers will need to obtain a chartered banking license, submit to Federal Reserve audits, purchase insurance, and potentially store assets with the Federal Reserve.