Since regulators shuttered key reserve banking partner Silicon Valley Bank, USDC outflows have surpassed $10 billion. Although Circle weathered the SVB’s crash to return to its $1 peg, USDC’s market cap was down 23% from its one-time $43 billion.
USDCl’s drop comes as the stablecoin sector is facing challenges due to banking sector uncertainties and increasing regulatory scrutiny. Binance’s stablecoin BUSD has also continuously plummeted since the Paxos incident.
Over the past week, investors have redeemed more than $1.5 billion more USDC than new issuance, including the bankrupt crypto broker Voyager. Voyager redeemed $150 million on Tuesday.
As USDC climbed back to its $1 peg, the circulating supply began to decrease, which proved that investors converted USDC to US Dollars, creating a net outflow. Investors seem to switch to stablecoin USDT, the largest stablecoin on the market, boosting its dominance to the highest level since May 2021. USDT’s issuer, Tether, had to face scrutiny over its reserve assets and lack of transparency for many years, but investors do not seem to care much about that because USDT is not losing its peg like its competitor – USDC.
Since March 10, the market cap of USDT has increased by around 8 billion USD to 79.8 billion USD and accounts for 60% of the market share in the stablecoin space. The last time that USDT achieved such a high market share was from May 2021.
Besides USDT, another stablecoin, TUSD (trueUSD), is also attracting the community when it was touted by Binance as an alternative to BUSD, which was alleged by United States Securities & Exchange Commission (SEC) as an unregistered security. The capitalization of TUSD has increased by $2 billion, ranking 5th among the stablecoins available in the market.