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Tether Under Threat as USDC Tops it In Transaction Volume with $456 Billion?

Last Updated April 29, 2024 12:21 PM
Teuta Franjkovic
Last Updated April 29, 2024 12:21 PM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Visa data shows Circle’s USDC stablecoin surpassed Tether (USDT) in trading volume for 2024 so far.
  • USDC hit a trading volume of a new index on its dashboard to track the stablecoin market more accurately.
  • Payment giant Stripe’s recent decision to accept USDC for crypto payments could significantly increase its usage.

Circle’s USDC stablecoin outpaced Tether  in trading volume this year, making it the new market leader. The news comes not long after a report by S&P suggested new American legislation could benefit the crypto.

Visa, in partnership with Allium Labs , introduced an adjusted stablecoin index on its newly launched dashboard website. This index should, at least in theory,  accurately represent the state of the stablecoin market. It mitigates any ‘potential distortions’ caused by artificial inflationary behavior. One of its findings is that USDC has the highest trading volume of any stablecoin.

Circle’s USDC Surges in Trading Volume, Leaving Tether in the Dust

Since the start of 2024, Circle’s USDC has been capturing a larger share of the market, with its trading volume last week hitting $456 billion, significantly outpacing Tether’s USDT, which recorded a volume of $89 billion. Since January, USDC has comprised 50% of the total trading volume. Visa, which formed a partnership  with Circle back in 2020, has yet to provide specific reasons for the surge in USDC’s usage.

Recent  trading results have surpassed expectations, given that USDT maintained a 68% share of the circulating coin market, while USDC held 20%. This performance is noteworthy as many onlookers considere USDT to be the dominant stablecoin in the industry.

Noelle Acheson, the author of the “Crypto Is Macro Now” newsletter, suggests  that the discrepancy between USDT and USDC usage might be attributed to USDT being more commonly held outside the US as a dollar-based store of value. Meanwhile, USDC is more popular within the United States, where it is used to pay for things.

Are Stablecoins Really Stable? USDC’s Decline Already Raised Red Flags

Stablecoins, designed to maintain a consistent value pegged to a fiat currency, are integral to the cryptocurrency ecosystem. They help the movement of funds and enable payments for activities such as cross-border remittances.

Stablecoin index
Credit: Allium

These insights arise following Circle’s involvement in last year’s US banking crisis. During that time,  the total value of USDC in circulation dropped from $56 billion to $23 billion in December 2023. This decline happened after Circle disclosed a $3.3 billion exposure to the failed Silicon Valley Bank. Since then, the value of USDC has rebounded to $32.8 billion.

However, Cuy Sheffield, Visa’s Head of Crypto, notes  that interpreting stablecoin transaction data can be complex. The data includes various use cases. Meanwhile, people can start them manually, but bots can also be programmed to do so.  When filtering out bot-related transactions, the total transfer volume  over the 30 days to April 24 significantly reduced from $2.65 trillion to $265 billion.

USDC Gains Momentum as Stripe Embraces Stablecoins,

CCN recently reported that after a six-year hiatus, Stripe has reintroduced crypto payments . This time opting to integrate stablecoins rather than Bitcoin. Stripe has chosen USDC for stablecoin payments, potentially making it Circle’s most significant client to date and boosting USDC’s adoption at a time when Tether, the market leader, faces several challenges to its dominance.

With Tether’s USDT holding a market capitalization  of over $110 billion and accounting for roughly 70% of the global stablecoin market, USDC remains a distant second. However, even a small percentage of Stripe’s substantial annual transaction volume—over $1 trillion processed in 2023—being converted into stablecoins could significantly narrow the gap between USDC and USDT.

Given Stripe’s strong eCommerce position, it is arguably the company best positioned to make stablecoin payments mainstream. Its move from Bitcoin – which it ditched six years ago – to USDC could change things significantly. We do, however, need to wait and see whether this will actually happen.

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