Although the Stablecoin market is still dominated by Tether (USDT), rival coin USD Coin (USDC) is attracting attention. According to a report from analytics firm Glassnode, USDC recorded a 112% increase on crypto exchanges in January.
USDC attracting Investors
One of the trends noticed by Glassnode is the influx of USDC on exchange in recent weeks. This influx of USDC had started towards the end of 2020 but became pronounced in January according to Glassnode.
In January, alone the number of USDCs on the exchanges increased from $431 million to $915 million. This metric is important as the price of USDC is stable as it is pegged to the US dollar.
An increase in this proportion shows that more investors are looking to purchase cryptocurrencies using the stablecoin. Glassnode points out that this trend is good news for Bitcoin and other cryptocurrencies. “This trend is bringing more purchasing power to the cryptocurrency market, which acts as a catalyst on hold, ready to be used for purchases of BTC and other crypto assets.”
Investors typically use stablecoins to stabilize their funds before exchanging them for volatile cryptocurrencies. So this movement of USDC to exchanges represents a bullish sign for the markets says the report. “[This influx] can bolster investor confidence that any fall will be easily offset by purchases . “
Tether (USDT) Remains The Dominant Stablecoin
Despite its recent gains in January, USDC is still far behind Tether (USDT) in terms of Market Capitalization. Tether is firmly established in the top 10 coin rankings and is currently ranked third on the list.
The leading stablecoin has experienced rapid growth in recent years and is approaching $27 billion in market cap. However questions continue to be asked about Tether’s reserves which are meant to be backed by US Dollars. The stablecoin has been accused of using Bitcoin (BTC) in place of dollars. In addition its partner bank Deltec has been vague about the nature of its dollar reserve.
Tether’s lack of transparency along with the legal worries could pose a major problem for the stablecoin. This could allow other dollar backed stablecoins like BUSD and USDC to thrive and take some of its market cap. It remains to be seen whether investors will move from the popular USDT to other options despite these problems.
