USD Coin (USDC) stabilizes at a significantly higher market cap following the market downturn.
As Bitcoin (BTC) and the cryptcoin market in general undergoes a significant decline, people resort to stablecoins in an attempt to preserve their capital. However, some stablecoins have grown more than others.
In general, market capitalizations of stable currencies are expected to increase after a significant drop in the crypt coin market. However, this is not what happened for most stablecoins during the past week.
According to Coin360 data, the price of Bitcoin fell from a height of nearly $8,000 to less than $4,000 between March 12 and 13.
USDC market capitalization is growing strongly
Jeremy Allaire, the co-founder and CEO of Circle, the firm behind the USD Coin (USDC) stablecoin, noted that on March 14, his company’s stablecoin market capitalization reached a new all-time high of $568 million after the market crash. He commented:
“While it is not as exciting to see markets so crushed, it is still gratifying to see that this all-new, all-digital, blockchain-based monetary infrastructure is working”
Allaire expects demand for digitized dollars to increase significantly as individuals and businesses “will want an architecture where they can make and receive payments with less counterparty risk, and more security. He also said the coronavirus pandemic highlighted the need for an infrastructure that requires less reliance and more decentralization.
According to Coin360 data, the USDC market capitalization increased by more than 5.5% just after the Bitcoin price dropped to its lowest point. At that time, the USDC reached a market cap of about $553 million. Interestingly, the market capitalization of stablecoin declined sharply, returning to its previous levels of about $520 million. Ultimately, the price rose by 7.66% even more sharply the next day, when it stabilized.
USDC’s initial reaction to the market downturn was similar to that of most large stablecoins. Major stable currencies such as Tether (USDT), True USD (TUSD), Binance USD (BUSD) and Paxos Standard Token (PAX) experienced a sharp increase in market capitalization just after the fall, before normalizing a few hours later.
However, it is not clear why the USDC itself experienced such aggressive growth soon after. This development follows the Circle’s announcement of three new APIs for businesses. These are intended to facilitate the use of USDC as a replacement for traditional fiat currency channels.
The increase in stable currencies
Although they are not recording the same levels of growth, all the major stablecoins have experienced a similar slow but steady upward momentum over the last year. This is also shown in the data reported by the cryptodata website, CoinCodex.