Circle’s stablecoin, the USDC, has grown immensely in recent months despite the FTX saga. According to reports, the stablecoin’s daily transfer is hitting higher volumes than any other stablecoin.
USDC Outperforms USDT In Transfer Volumes
An on-chain data report from Glassnode, a blockchain analytics company, shows that USDC is outperforming its rival stablecoin, USDT. However, USDT’s market cap is over $23 billion higher than USDC.
On January 10th, USDC’s transfer volume surpassed USDT by approximately five times. Both stablecoins witnessed a massive rise in transaction volume after Changpeng Zhao, Binance CEO, on November 6th, tweeted about liquidating its entire FTT holdings.
Several crypto holders were converting their assets to stablecoins. Shortly after Zhao’s tweet, FTX filed for bankruptcy on November 11th. Following the FTX bankruptcy, USDC became the preferred stablecoin for most crypto investors.
Glassnode data shows that the stablecoin has an average daily transaction volume of $12.5 billion higher than the USDT. Generally, Stablecoins, like USDC and USDT, are meant to maintain a stable value and trade close to $1. Reserves held by the issuer support these stablecoins.
Interestingly, most investors in the crypto space believe the USDC is a relatively more secure choice than the USDT. Most proponents refer to USDC’s assets support through short-term US treasuries or cash.
Meanwhile, Tether has been under fire in recent months. Last year, the crypto community criticized the platform for not releasing a comprehensive audit of its PoR. Many also accused the company of not being transparent with its reserves.
USDT Depegged After FTX’s Collapse
In October 2021, the US Commodity Futures Trading Commission (CFTC) fined Tether over $41 million. The commodities regulator alleged that Tether only held sufficient reserves between 2016 to 2018 despite claiming its stablecoin was fully backed.
In 2022, Tether took numerous steps to reduce its commercial paper while seeking safer alternatives. On November 10th, the company’s report revealed that about $46 billion in Tether’s reserves comprises US treasuries, cash, and bank deposits.
Notably, the stablecoin depegged from the USD shortly after the collapse of FTX. This sparked fears that Tether had some exposure to FTX. However, the company has since debunked those rumors.
Furthermore, USDT was recording greater transfer volume than USDC until May 2021. This was after Tether increased its token supply to $61.82 billion from $8.79 billion, an increase of 603%.
Unfortunately, there has been a profound change in investors’ preferences, with many shifting towards the USDC. Still, Tether believed the rise in its market cap shows that the market still has confidence in the USDT.