USDC Outflows: Investors Flee to USDT, Tether Dominates Stablecoin Market
• USDC stablecoin has experienced significant outflows following the closure of its key reserve banking partner Silicon Valley Bank in March.
• USDT has surged in popularity and market cap as investors have fled to it from other stablecoins, leading to a 23% decrease in USDC’s market capitalization.
• USDT has become the largest stablecoin, with a 60% market share among stablecoins thanks to BUSD’s halt by New York regulators and increasing regulatory scrutiny.
USDC Outflows Exceed $10B
USDC stablecoin has experienced significant outflows following the closure of its key reserve banking partner Silicon Valley Bank (SVB) in March. As a result, USDT has surged in popularity and market cap as investors have fled to it from other stablecoins, leading to an overall decrease of 23% in USDC’s market capitalization.
Circle Backs Stablecoin Value
Circle, the issuer of USDC, backed its value with short-term government bonds administered by BlackRock and cash reserves at various U.S. banks after SVB’s collapse locked $3.3 billion of cash reserve deposits in its vaults for days until government intervention occurred. Despite this action, USDC still failed to regain its former market capitalization of $43 billion which had dropped by 23%.
USDT Becomes Largest Stablecoin
The instability within the stablecoin sector due to uncertainties in the banking sector and increasing regulatory scrutiny caused Tether (USDT) to become the largest stablecoin with a 60% market share among all other coins since February when New York regulators told Paxos to stop minting Binance USD (BUSD). Since then, USDT’s market capitalization has grown over 8 billion dollars from $71.5 billion to $79.6 billion as investors were fleeing BUSD and USDC towards Tether instead due to its greater security features and trustworthiness within the crypto ecosystem.
Why Investors Flee To USDT
Due to its security features such as being backed 1:1 with fiat currencies such as UDS or Euros on an opaque off-shore account and having no direct exposure to any traditional financial institution, many investors feel more comfortable investing their money into USDT than any other type of coin or asset class. This is why Tether continues growing despite all levels of criticism against it for lacking transparency regarding how funds are stored or managed; making it one of the most widely used cryptocurrencies for trading activities today even though some governments have imposed tighter regulations on it recently which could hurt further growth potential down the road if left unaddressed soon enough .
Overall, Tether (USDT) remains one of the most popular cryptocurrencies due primarily because many people trust it more than any other type of digital asset class for facilitating trades without worrying about volatility issues that often occur when dealing with altcoins or tokens such as Bitcoin or Ethereum respectively