The Divergence Between Tether and USDC: Tether in circulation has reached an all-time high of $83.36 billion, as per the firm’s transparency report. However, Circle’s USDC, once favored by institutions, has seen a decline in demand due to regulatory uncertainty and exposure to bankrupt Silicon Valley Bank, resulting in a decline of almost 50% since June 2022. USDT takes the lead with a commanding 64.5% market share in the total stablecoin market capitalization, which currently stands at $129.3 billion, representing almost 12% of the entire cryptocurrency market capitalization. Glassnode has reported that both USDT and USDC are leaving centralized exchanges with both stablecoins hitting a monthly high for outflow volumes. The flight to safety from exchanges, especially Binance, has increased following the SEC’s twin lawsuits and enforcement action last week. However, Binance CEO Changpeng Zhao cautioned investors not to read too much into Binance outflow figures from analytics platforms because they use TVL (total value locked), which includes decreases in crypto asset prices.
The Impact of America’s Crypto War
The stablecoin ecosystem has been impacted by America’s war on crypto, with a clear divergence happening between the top two issuers. Industry analyst Will Clemente comments, ‘the divergence from USDC is striking, reflecting easier access to treasuries for US-based USDC holders and regulatory uncertainty for US-based Circle. What was once a competitive advantage for USDC is now the opposite.’
Crypto Market Outlook
Crypto markets have calmed over the weekend as the consolidation continues. BTC prices have held steady at $25,800, while Ethereum has dipped marginally to $1,735 at the time of writing. BNB has been hit the hardest, having lost 25% over the past week, trading at its lowest price this year at $222, having dropped another 5% at the time of writing.