In a world where many stablecoins have been created, Tether USDT was once king. But with the cryptocurrency crash, others have fought seriously to take the position. But it seems that USDC could soon take over the position from USDT.
The crypto market crash of 2022 left an unpleasant taste in the mouth of investors. Even though it started with a Federal Reserve interest rate hike and more panic spread, Tether USDT's subsequent crash did little to stop this situation from becoming out of control.
Stablecoins are a new type of cryptocurrency aiming to maintain value stability. One example is Tether (USDT), which has been linked with the US dollar and issues its own tokens on crypto exchanges – this means you can trade one USDT for another while they're all supposed to remain pegged at 1:1.
One of the most common uses for stablecoins is as a form of hedge against crashes. So, instead of leaving their assets in other cryptos, investors prefer to hold them in stablecoins.
But suppose an investor holds all his assets in a particular stablecoin, and it depegs from the US dollars, he will lose his funds. That's what happened with Tether and caused mayhem in the crypto market.
The USDC has continued to spike in growth for some time now. The stablecoin saw a massive increase in value from January to April 2022 before the market crashed in May. With its growing trend, analysts predict this stablecoin to become number one.
The USDT fell by 28.7%, while USDC's growth rate spiked by 70.4%. Experts predict that if this trend continues, the USDC will soon overtake USDT and become the biggest stablecoin. The market cap of the USDC is expected to cross 61.3 billion within two months, on October 10th, 2022. This is the point it is expected to overthrow USDT.
Before the recent competition, Tether USDT stood unopposed in the stablecoin market.
It also enjoyed the "first mover advantage," but unfortunately, its market cap dropped 50% in November 2021 and even more greatly in 2022. Then, the market cap was around $78 billion. As of today, it's at $69 billion.
With USDT falling throughout 2022, USDC saw massive growth in its market cap. From $42 billion to $55billion with an increase of 70% in one year. Notably, the USDC is more compliant with regulations which have proven to be an advantage.
While USDC stablecoins have been gaining market share, it's clear that USDT was ahead of it. USDT was at 47.5%, while USDC only accounted for 25.8%. But now, the USDT has fallen to 43.8%, while USDC rose 36.3%. So, it's clear that while USDT continues to decline, USDC is recording continuous growth.