The USDC Market Capitalization Hits Two-Year Low as Recovery Stalls

The USDC Market Capitalization Hits Two-Year Low, Analysts Say Recovery Has Not Fully Occurred

The USDC market capitalization is currently at its lowest level in two years, as analysts say it has not yet fully recovered after the de-peg earlier in the year.

Data from CoinGecko shows that the market value of USDC is just over $26 billion — its lowest level since July 2021, when it reached $25.1 billion.

The stablecoin remains the sixth largest cryptocurrency by market cap, but it has fallen further in terms of dominance than its biggest competitor, Tether (USDT), which is currently valued at $82.7 billion.

Just a year ago, USDC had a market capitalization of $56 billion, cementing its position as the second largest stablecoin. However, in March 2023, amid a regional banking crisis that caused the collapse of the Silicon Valley Bank (SVB), USDC briefly lost its peg to the dollar after it was revealed that Circle held more than $3 billion of its reserves in SVB.

Some cryptocurrency market observers believe that the decline in USDC may also have been the result of rising interest rates, which made holding USDC slightly more expensive than holding similar financial instruments.

Wintermute CEO, Evgeny Gaevoy, also recently pointed out that the difference in the issuance model of USDC compared to USDT could affect the market value of USDC.

The drop in the stablecoin’s market cap comes even as its issuer, Circle, has sold a minority stake to cryptocurrency exchange Coinbase (COIN).

As reported by News Agencies, Coinbase entered into a strategic agreement with Circle on August 21 that will lead to the dissolution of Centre, a member-based consortium founded in 2019 that was responsible for managing and issuing USDC.

According to the partners, the decision to dissolve the center was prompted by increasing regulatory clarity around US stablecoins

Following the agreement, Circle will now be fully responsible for the issuance, supply and management of USDC. It also states that the two companies will equally share profits generated by USDC collateral held outside of their platforms.

Moreover, Circle revealed that it will be integrating USDC into six new blockchains in the next few weeks. The stablecoin already has a presence on Ethereum (ETH), Solana (SOL), Algorand (ALGO), and Avalanche (AVAX), among others.

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