The talk of the crypto market lately has been the sudden significant surge in printed tether and its possible impact on Bitcoin. What they failed to realize, however, is that USDC supply has also doubled in the past two months.
Is this a sign that smart money crypto holders are slowly but surely giving up tether for other stablecoins?
The market capitalization of USD coins will double in two months, but why?
Once upon a time in the crypto market, the only stablecoin in the room was Tether. Crypto traders traded their Bitcoin, Ethereum, XRP, Litecoin and other altcoins for USDT when the volatility hit and prices plummeted.
The dollar-pegged stablecoin protected wealth from drawdowns and acted as a stable, safe haven for capital while holding money in the crypto market.
Related reading | How does the next chapter in the tether printing history for Bitcoin work?
But competition eventually emerges in every market and market leaders are shackled for their throne. The almighty Tether, which is currently approaching its market capitalization of 15 billion US dollars, finally has a competitor in its hands with USD Coin.
Although the Tether offering, which was minted recently last month, dwarfed USD Coin’s total market cap, USD Coin has risen higher along the top cryptocurrency coins by market cap.
The stablecoin, built by the Consortium Center, supported by Circle and Coinbase, also doubled its market capitalization in the past two months, rising from $ 1 billion to $ 2 billion. But what is behind the sudden demand?
BTCUSD Daily Price Chart Versus Tether and USD Coin Market Cap Growth | Source: TradingView
Tether Problem: Why Would Smart Money Replace USDT With USDC Instead?
According to crypto-Twitter chatter, “Smart Money” could swap tether in favor of USD Coin over time in order to avoid a possible implosion.
While USD Coin is backed by Coinbase and Circle, Tether’s parent company is the same as Bitfinex, and the two have been surrounded by controversy over the past few years of the crypto market price movement.
Related reading | Financial Advisory Group: Bitcoin would be 40% more valuable without manipulation
It has been alleged that Tether is at the center of widespread Bitcoin price manipulation and this sparked an investigation by the DoJ. The parent company is regularly involved in legal disputes, and the crypto community has feared bankruptcy in the past.
USD Coin, on the other hand, has always been transparent and works with United States regulators. The shipment is checked regularly by the seventh largest company in the world, Grant Thornton LLP.
If stablecoins are to act as a safe haven for crypto capital, then it makes sense for investors to move funds out of Tether and into something more “stable” than even a dollar link can offer.
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