Home CryptocurrencyBitcoin Data Tether vs. USD Coin on-chain reveals two very different stablecoins

Data Tether vs. USD Coin on-chain reveals two very different stablecoins

by SuperiorInvest

USD coins (USDC), a stablecoin issued by the American company Circle Financials Ltd., is taking the lead over its biggest rival Tether (USDT), in terms of institutional adoption, according to chain data.

Daily USDC transfer volumes are higher

The market capitalization of USDC tokens in circulation is around 44 billion USD compared to 65.42 billion USDT. However, the daily conversion value of USDC on the Ethereum blockchain has been consistently higher than USDT throughout 2022, as data from Glassnode shows.

For example, as of November 22nd, the daily transfer of USDC was approximately 14 billion USD compared to 5 billion USDT.

USDC vs. USDT daily transfer volume. Source: Glassnode

In other words, USDC users engage in relatively higher capital transfers compared to USDT users, suggesting that USDC is increasingly the stablecoin of choice among high net worth entities, including institutional whales, hedge funds, family offices, crypto exchanges, etc.

Related: According to the certificate, 82% of Tether’s reserves are held in “extremely liquid” assets

Additionally, USDC leads November 22nd USDT in terms of supply weight across smart contracts. In particular, USDC accounted for 33.75% of the total stablecoin supply closed across staking pools. In comparison, the USDT bid is around 12.50%.

USDC vs. USDC offer in smart contracts. Source: Glassnode

But the higher daily transaction count compared to USDC suggests that Tether is more likely to be used for retail trading and transfers such as remittance.

USDC Daily Transactions vs. USDT. Source: Glassnode

On the other hand, USDC appears to be the best stablecoin choice for tech-savvy institutional traders who lock their funds into staking contracts to earn a return.

This is further reflected in the lower daily number of USDC active addresses of 40,245 versus the 73,000 USDT recorded on November 21st.

USDC vs. USDT daily active addresses. Source: Glassnode

In addition, crypto trading platforms implementing the so-calledconfirmation of reservesAfter the collapse of FTX, more Tether seems to be holding over USD Coin, further signaling that USDT is likely to be more popular among retailers.

These exchanges include Binance, KuCoin, BitFinex, ByBit, OKEx and Huobi. Crypto.com reserves are an exception with more USDC than USDT.

Crypto.com Proof of Reserves. Source: CoinMarketCap.com

After the FTX collapse, Tether’s market cap dropped

USDT’s market cap has fallen by almost $4 billion since the FTX exchange crash almost two weeks ago.

The reason may be Tether swerve briefly from its valuation of $1, and on November 10 it reached 96 cents after it froze worth $46 million USDT tokens associated with FTX.

Interestingly, USDC’s market cap increased by nearly $2 billion after the FTX fiasco began on November 10th.

USDT vs. USDC market capitalization for the last six months. Source: Messari

Tether has a history of breaking its dollar peg during extreme market stress, albeit to a lesser extent in recent years.

For example, the token fell below 95 cents during the crypto market sell-off in May, which coincided with an increase in USDC’s market cap. This suggests that some investors have shifted their capital from Tether to USD Coin as the former has lost its dollar peg as shown below.

USDT/USDC three-day price chart. Source: TradingView

However, Tether returned to dollar parity within days and claimed that the tokens were in circulation backed up 100% reserves a tied 1-to-1 with dollars.

This article does not contain investment advice or recommendations. Every investment and trading step involves risk and readers should do their own research when making decisions.

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