After Terra’s UST collapsed, there was a pointy deal with dollar-pegged stablecoins. There are in reality fears that one other de-pegging may pose systematic dangers for the whole crypto market. Nonetheless, USD Coin has emerged as one of many key options to Terra’s UST. Right here is why:
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USD Coin is managed by a verified consortium of specialists.
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USDC can also be backed by {dollars} which are literally held bodily in reserve.
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The stablecoin can also 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 isn’t rising as quick as its market cap suggests.
As an illustration, USDC liquidity on Uniswap, one of many largest DEX on the 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 biggest wallets favoring Tether. In reality, analysis by Glassnode notes that the share of USDC held by 1% of the biggest crypto wallets is at a one-year low. Whereas this isn’t a large enough concern, it suggests that there’s restricted demand for the coin.
Is USDC going through De-pegging dangers?
In the meanwhile, there’s nothing that signifies USDC is going through any attainable danger of de-pegging. The UST collapse after all has put traders on edge. However thus far, USDC has managed to keep up a secure peg on the greenback.
It’s unlikely we’re going to see any de-pegging quickly. Nevertheless, one factor we could be positive about is that USDC is years away from competing with Tether.