Tether (USDT) has long been comfortably ensconced on its throne as king of stablecoins. But could that change? Yes, according to a study that predicts Circle’s USDC will soon overtake it.
USDC is coming to hunt on USDT’s land
The stablecoin industry has seen a considerable shakeup this year with the fall of the Terra ecosystem. As a result, this category of crypto-currencies is under increasing scrutiny from regulators. The USDT, a historical troublemaker that used to make do with rather loose communication, has suffered. This has given way to a major competitor: USDC, a stablecoin backed by Circle and Coinbase.
As the report points out, USDT’s dominance dropped below 50% for the first time in November 2021, in the face of new rivals. Looking at its capitalisation, the fall is very clear, and was initiated with the Terra deal last May:
Progression of USDT capitalisation
Tether has suffered from the wave of mistrust that has swept over stablecoins, especially as it briefly lost parity with the dollar as FUD reigned in the markets. The USDC, on the other hand, has fared quite well in recent months:
USDC capitalisation growth
A flippening in the offing
Today, the USDT and USDC are the 3rd and 4th most capitalized crypto currencies. Their market cap is now separated by only $10 billion. Hence the assumption that the USDC will soon overtake the USDT. Arcane Research’s projections tend to confirm this scenario:
Projection of the evolution of UDST and USDC capitalisations
According to these estimates, the USDT and USDC would cross next fall:
“Extrapolating these growth curves, the USDC would dethrone Tether as the largest stablecoin, with a market cap of $61.3 billion, on October 10, 2022. “
These predictions do not, of course, take into account events that may occur between now and then, but simply state a basic trend.
It should also be noted that regulators are expected to continue to review – and legislate – with regard to stablecoins in the coming months. This could therefore favour cryptocurrencies such as the USDC, which have been transparent from the start.
