Wednesday, December 7, 2022
    HomeMarketWhy USD Coin remains under Tether’s shadow despite growing interest

    Why USD Coin remains under Tether’s shadow despite growing interest


    After Terra’s UST collapsed, there was a pointy give attention to dollar-pegged stablecoins. There are actually fears that one other de-pegging might pose systematic dangers for your entire crypto market. Nonetheless, USD Coin has emerged as one of many key options to Terra’s UST. Right here is why:

    • USD Coin is managed by a verified consortium of specialists.

    • USDC can be backed by {dollars} which are literally held bodily in reserve.

    • The stablecoin can be backed by different reserve belongings together with US treasury payments.

    Information Supply: TradingView 

    Why is USD Coin behind Tether?

    With the attributes listed above, it’s clear that USD Coin has all of the makings to turn out to be an enormous stablecoin. In reality, its market cap has been rising, particularly after the collapse of Terra UST. Nevertheless, there are some indicators that USDC just isn’t rising as quick as its market cap suggests. 

    As an illustration, USDC liquidity on Uniswap, one of many largest DEX on this planet, has dropped considerably in latest months. Excessive liquidity on a platform like Uniswap usually signifies {that a} stablecoin is in excessive demand. The truth that USDC is dropping is a priority. 

    We’re additionally seeing the most important wallets favoring Tether. In reality, analysis by Glassnode notes that the share of USDC held by 1% of the most important crypto wallets is at a one-year low. Whereas this isn’t a sufficiently big concern, it suggests that there’s restricted demand for the coin.

    Is USDC dealing with De-pegging dangers?

    In the intervening time, there’s nothing that signifies USDC is dealing with any attainable danger of de-pegging. The UST collapse in fact has put buyers on edge. However up to now, USDC has managed to take care of a secure peg on the greenback. 

    It’s unlikely we’re going to see any de-pegging quickly. Nevertheless, one factor we might be positive about is that USDC is years away from competing with Tether.

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