Is USD Coin posing threat to stablecoin king, Tether?

Lavina Daryanani
Source: FXLeaders

It is a known fact that Bitcoin rules the crypto market. Tether, nonetheless, assumes authority in the stablecoin kingdom. In terms of market capitalization, the gap between the king-coin and the second-ranked Ethereum is quite substantial—$574 billion v. $250 billion. A similar disparity also exists in the stablecoin market.

The market cap of the #1 ranked stablecoin—USDT—reflected a value of $74 billion at press time, while that of the #2 ranked coin—USDC—stood at $52 billion.

In fact, in terms of volume, the gap was much wider. Over the past 24-hours, over 54.8 billion Tether tokens were traded, but USD Coin’s number was merely a tenth of the same—5 billion.

Source: CMC

Well, the data above clearly indicates Tether’s established presence in the market. Nonetheless, the latest data from Glassnode suggests that market participants’ preference has started changing already.

Stablecoin Tether’s supremacy challenged

Of late, the issuance of Tether and USD Coin has been sharing an inverse relation. USDT tokens are being removed from circulation by being exchanged for cash [redemption], while additional USDC—and BUSD for that matter—are being issued because of demand.

Source: Glassnode

A closer look at USDC’s prospects suggests that it reversed the trend of supply contraction that had been in place since late February, expanding by $2.639 billion. The same is a clear indication of evolving market interest.

Outlining the same, Glasssnode’s latest weekly report noted,

“Given the dominant growth of USDC over the last 2yrs, this may be an indicator of changing market preference away from USDT and towards USDC as the preferred stablecoin.”

Source: Glassnode

The preference change was visible last week when Tether lost its $1 peg and dipped to $0.94 last week. Market participants started re-diverting their capital from Tether towards other stablecoins like USDC and BUSD.

Despite the changing preferences, it shouldn’t be forgotten that Tether remains to be the largest stablecoin and USDC and other coins have miles to go before standing a chance to ‘flip’ Tether. Until then, Tether will remain to be the crowned prince of the stablecoin kingdom.