USDC has been seen to take a rough beating lately as the market cap of the second largest stablecoin’s has hit a 2-year low.
Based on the data by CoinGecko, the market cap of USDC is now hovering around the $26 billion mark, which is way down from its all-time high of approximately $56 billion in June last year. As far as the stablecoin’s competitor, USDT, is concerned, the largest stablecoin has hit an all-time high of $38 billion along the same metrics.
Potential Reasons for the Crash of USDC?
Experts have proposed a series of reasons for the declining market cap of USDC. The most noticeable factor that pushed the stablecoin down is most likely its major depegging incident that took place earlier this year. Amid the crisis in the banking sector, Circle revealed that it had a sum of $3 million caught up in the mess, which inevitably dragged the stablecoin to the $0.87 mark. Furthermore, analysts continue to argue that USDC still has not recovered from the banking crisis.
Another reason for the decline in the overall market cap of the stablecoin can be associated with the steady rise of interest rates. As people are figuring out high rates for bank accounts, the cost of parking cash in USDC is continuously growing. Apart from that, analysts argue that people are most likely to sell USDC instead of USDT as USDT is increasingly challenging to burn over the weekends. At the same time, it is necessary to keep in mind that Tether has a 0.1% redemption fee.
USDC Strives to Make a Comeback
USDC is most widely used as dry powder on DeFi, whereas USDT is commonly used as perp collateral. However, the recent development might suggest an end to the stablecoin race, but it is far from over. At the moment, Circle is trying its best to get its stablecoin back in the hands of a majority of users.
Just a while ago, it came to light that the USD Coin would now be integrated with Shopify which would allow merchants to enjoy nearly free payment acceptance when using the stablecoin. Moreover, Circle announced that the token would be made available to six more blockchains which also includes the recently launched Base network. These developments could drive more interest and investment in the token, helping it regain its market stature.
