Circle’s USDC, the second-largest stubcoin in the market, rose to a record market capitalization of over $56 billion this week as Stablecoin’s growth showed signs of a resurgence this week.
USDC added $10.2 billion to its market capitalization last month, primarily based on an increase in Defi trading volume, based in Solana. This is more than twice the $4.6 billion growth of USDT from Tether, the largest stubcoin in the market in the same period and the circle’s biggest competitor. USDT still controls the Stablecoin space with a market capitalization of $142 billion.
With the latest growth, USDC surpassed its peak in 2022 and has fully recovered from the 2023 US Regional Bank crisis. At the time, the circle held a portion of the Silicon Valley Bank’s bank deposit stubcoin reserve, struggling with banking runs, and USDC temporarily lost the peg to the US dollar. Many token holders fled to USDT and in May 2023 supported Tether, which exceeded its peak market capitalization in 2022.
Stablecoins are a special type of cryptocurrency with prices fixed on external assets, primarily towards the US dollar. USDT and USDC are widely used for trading on crypto exchanges and serve as important sources of liquidity. Therefore, their expansion of supply is a key indicator of investor demand and overall health in the crypto market.
After a lukewarm period from December to early January, USDT and USDC growth has accelerated over the past few weeks, data shows. Previous growth, including from late October to early December 2023 to April 2024, coincided with sudden gatherings in Bitcoin (BTC) and Altcoin prices.
Accelerating Stablecoin’s growth is just one factor affecting the crypto market, but it provides a positive signal for the health of the entire market amid macro headwinds and price integration.
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