USD Coin (USDC), a stablecoin issued by US-based payment technology firm Circle, has fallen below $50 billion for the first time since January 2022.
On the weekly chart, the market value of USDDC, the US dollar-backed token in circulation, fell to $49.39 billion on September 26, down 12 percent from a high of $55.88 billion set three months ago.
In contrast, Tether (USDT), which was at risk of losing its top stablecoin position to USDC in May, had a market cap of more than $68 billion on Sept. 26, although it was down 17.4 percent from its May 2022 high of $82.33 billion.
The divergence between USDT and USDC reflects investors’ renewed preference for the former. Let’s take a look at what makes Tether the most stable coin.
Binance’s USDC ban
Binance, the world’s largest cryptocurrency exchange by volume, announced in early September that it would swap its users’ USDC accounts for its own stablecoin, Binance USD (BUSD). The conversion will begin on September 29th and will not apply to USDT.
The exchange said it wanted to “enhance liquidity and capital-efficiency for users” in the face of forced conversion in an increasingly competitive stablecoin sector. As a result, Binance has suspended spot, futures and margin trading in USDC.
8/ 1. Binance’s forced “self-conversion” is a clear unique characteristic of a typical fintech company.
They are no better than traditional banks that have the power to freeze or control user funds
Where is the decentralized future? # web 3 Were users promised?
— Momentum 6 (@Momentum_6) September 21, 2022
USDC’s market value fell by $9.5 billion after the announcement.
Following in the footsteps of Binance, the India-based cryptocurrency exchange has stopped accepting USDC deposits since September 26.
RELATED: Binance: No Plans to Autoconvert Tether, Although ‘It May Change’
After the Terra fiasco, the Wells Canal USDC
According to data collected by Glassnode, USDC supply in 1% addresses (in whales) fell to 88.36% in September from a year-over-year high of 93.84%.
Ironically, the collapse of the $40 billion “algorithmic stablecoin” project accelerated after Terra in May, sparking negative sentiment for the entire stablecoin industry.
For example, the total market value of all stablecoins in It saw its worst correction in 2022, falling from a peak of $97.37 billion in February to $80.65 billion in September, according to CryptoQuant.
Tornado cash flow
The decline in the market value of USDC has increased after the US Treasury imposed sanctions on the crypto mix Tornado Cash over money laundering concerns.
Circle responded to the fine by freezing all USDC wallets owned by Tornado Cash. The organization banned addresses that could be connected to the banned mixing service from using USDC. In contrast, Tether refrained from blacklisting Tornado Cash addresses.
Independent market analyst Gerald Davidson said Circle’s response to Tornado Cash’s sanctions shows that holding the USDC is more risky than its stablecoin rivals.
“People now realize there is more risk in holding USDC, Circle has placed all USDC on Tornado Cash addresses under US Treasury sanctions.” It is mentioned In August 2022, adding:
USDC appears to be the only token on the blacklist, while other ERC-20 tokens were not.
Davidson as well to be treated Tornado cash is one of the reasons USDC whales have been dumping the stablecoin in recent months.
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