After a 7-week rally in May and June that sent USD Coin’s market capitalization above $56 billion, an all-time high, Circle’s stablecoin has now lost all the ground it gained earlier this year.
On Monday, USDC had a market cap of $46 billion—the lowest it’s been since January of this year.
USDC was recently dealt a blow from an effort to “enhance liquidity and capital-efficiency” at Binance. At the start of September, the world’s largest crypto exchange by volume said that it would begin automatically converting competing stablecoin balances—including USDC, Pax Dollar and TrueUSD—to its own Binance USD stablecoin.
At the time, Circle CEO Jeremy Allaire wrote on Twitter that the change could lead to “more USDC flowing into Binance.”
But so far, it’s hard to say if that’s true. The auto-conversions wrapped up on September 29. Since the start of September, when Binance made its announcement, BUSD’s market cap has gained 12% and USDC’s has lost 12%, according to CoinGecko.
Investors appear to believe that was true. Between May 9 and June 19, Circle’s stablecoin market cap went from $48 billion to $56 billion, according to CoinGecko.
That rise happened at the same time as a scare with Tether’s USDT, its largest rival, when the stablecoin briefly lost its dollar peg. As a result, during May and June, Tether dropped from a market cap of $83 billion to $68 billion, according to CoinGecko. Tether at the time managed to find a silver-lining, however, and chalked it up as a victory of sorts.
In late May, after Tether had already processed $7 billion in redemptions, Paolo Ardoino, the company’s chief technology officer, said on Twitter that the issuer handled it “without the blink of an eye.” He added that most banks wouldn’t have been able to weather a “bank-run scenario.”
For stablecoins that maintain their 1:1 peg with an underlying currency, in this case a US dollar, their market caps roughly mirror their circulating supply. That’s because most centralized issuers, including Circle and Tether, create new tokens when someone buys them—and then burn tokens, or take them out of circulation, when they’ve been redeemed.
For a time, it looked like USDC might overtake USDT to become the largest stablecoin by market cap. But the gap between the two largest stablecoins has increased to $22 billion, up from $10 billion in July.
The widening gap seems to have more to do with USDC’s slide than it does Tether’s growth.
While USDC is back where it started in May, when market conditions became especially harsh for stablecoins, Tether has yet to regain its all-time high. After experiencing billions in redemptions earlier this year, it’s still sitting $15 billion below the market cap it had before the Terra collapse.
Stay on top of crypto news, get daily updates in your inbox.
Manage Cookie Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.