Circle’s stablecoin is on track to topple Tether’s USDT by the end of the year as the market cap ratio between the two fell to its lowest since so let’s read more today in our latest cryptocurrency news.
The growth of the Circle stablecoin USD Coin in the past two months compared to the rival Tether is quite spectacular. USDT and USDC market cap ratios hit the lowest records and notably, USDC’s market cap increased by 8.27% in May and reached its highest level of $55.9 billion in July. USDT suffered a 19% drop in market value and now trades at $66.14 billion.
Everyone is talking about bearish things, but most of them haven't left the crypto market. They're just waiting for the bottom.#Bitcoin marketcap decreased by -70% from the top while stablecoin went down by just -11%. pic.twitter.com/dhgDzi9g2A
— Ki Young Ju (@ki_young_ju) June 30, 2022
This is the closest USDC has come to challenging the USDT supremacy in the stablecoin space based on the gap between their market caps. The USDT to USDC market cap ratio was above 9 back in 2020 but in July, it dropped to 1.20 which is the lowest on record. With less than $10 billion separating the stablecoins now, USDC can surpass USDT by market cap in a few months. USDC already flipped USDT in real volume on top of the Ethereum blockchain.
The bets anticipate that Tether will not be able to redeem all of the coins for the dollar in a bank run scenario. As a result, people will start selling stablecoins at a discount as it broke the peg. USDT has a history of going below the $1 peg due to market volatility, for example, the token value dropped to $0.85 amid rumors that one of the sister companies is insolvent. The same happened after the Terra collapse as the USDT value shortly plummeted to as low as $0.97 but the stablecoin recovered.
In contrast, USDC coin slipped below $0.99 twice since its launch and then dropped to $0.97 during the COVI Collapse in 2020 but then recovered to $1 and fell again to $0.98 in the same month. Investors enhanced their trust in USDC due to Circle functioning as a money service business that was registered with plenty of regulators in the US. As a result, the company reports the reserves to the authoriteis in line with the money transmission laws.
Paolo Ardoino as the chief technical officer at Tether said they will have the reserves fully audited by one top accounting company but until that happens, USDC is on track to close the gap with a flipping event as the stablecoin demand remains high.
DC Forecasts is a leader in many crypto news categories, striving for the highest journalistic standards and abiding by a strict set of editorial policies. If you are interested to offer your expertise or contribute to our news website, feel free to contact us at [email protected]