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October 4, 2022
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Tether loses its dominance to USDC –

Major changes are taking place in the stablecoin ecosystem. Circle’s USD Coin is quickly taking the dominance of sector leader Tether.

USDC drains USDT dominance

According to report Glassnode on February 1, the amount of USDC on exchanges increased by more than 112% in January alone, rising from $ 431 million to over $ 915 million.

Since the beginning of the year, about 1 billion new USDCs have already been issued, of which over 90% went to centralized exchanges.

With nearly $ half a billion USDC hitting the exchanges in one month, Glassnode speculates that traders are accumulating tokens to shop in the coming downturns.

This high number should increase investor confidence that any drops will be quickly bought back. This is a bullish signal.

The January increase in USDC may have been caused by Circle, which introduced the stablecoin-to-fiat bridge. In this way, the company wanted to enable easy transfers from USDC to USD.

Since the beginning of 2020, the supply of Circle stablecoin has increased by over 900% – from just over 500 million to 5.1 billion. By comparison, over the same period of time, the amount of USDT increased by approximately 500%. However, Tether’s recent capitalization increase is more than four times the value of the USDC increase over the past 13 months (in fiat currency).

The third largest stablecoin is Dai by MakerDAO. Its capitalization has increased by 3,800% – from just $ 40 million in January 2020 to over $ 1.6 billion today. Stablecoin Binance – BUSD also saw a massive 600% increase in supply and currently boasts a market capitalization of $ 1.4 billion.

According Coinmetrics USDT’s dominance in the stablecoin sector fell below 75% for the first time in history.

Tether’s trouble

Tether’s decline in dominance may to some extent be attributed to the company’s current legal troubles. Perhaps this prompts traders to look for alternative stable tokens. Tether has lost its link to the dollar several times in recent history. On January 5, 2021 and October 2018, its price fell to $ 0.96.

Tether may come under additional pressure if US lawmakers pass a new “Stable Act”. The new rules would require stablecoin issuers to obtain a charter banking license, submit to Federal Reserve audits, have insurance, and hold assets in a federal reserve.

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