With the crypto market crash has come a renewed interest in the cover that stablecoins provide investors. As a result of this, crypto investors had flocked to stablecoins such as USDT, BUSD, USDC, etc, for this exact reason. What followed was fierce competition between these stables as they pulled for more market dominance. Evidently, USDT has led the stablecoin market for years but it seems like this is about to change.
Stablecoin volume has been on the rise in recent times. With the implosion of UST had come wariness about the stability of these stablecoins but this sentiment quickly faded into the background as more investors took cover in them. This saw the market cap of the leading stablecoins grow even through the market crash. USDT had led the charge with its volume reaching record highs during this time.
However, it seems USDT is seeing more competition for its title as the king of the stablecoins. USDT which is now operational on multiple blockchains had maintained its high volume but is now seeing significant competition from USDC.
There are a number of reasons that are behind the move to stablecoins such as USDC. For the longest time, there have been concerns about the backing of the USDT tokens, such as holding Chinese commercial papers, which the company has denied. Mostly, Tether, the firm behind the stablecoin, has assured users that it is adequately backed but there remain those who do not believe there is enough backing for it. This is where USDC enters the picture.
Unlike USDT, Circle’s USDC has never come under the same level of scrutiny. The CFO revealed in May that it was “backed by the equivalent value of U.S. dollar-denominated assets.” Also, due to the fact that Circle is a lot more forthcoming about the investments that back the tokens, they have enjoyed a higher level of faith among investors as it is presently viewed as a ‘safe’ stablecoin to put money into.
The market cap of these two stablecoins also mirrors the fierce rivalry between them. USDT maintains its position as the largest stablecoin in the market but USDC remains right behind it. While the former boasts a market cap of $67.4 billion at present according to Coinmarketcap, USDC’s market cap has grown to $55.67 billion, making it the second-largest stablecoin.