No doubt, the crypto winter has affected all crypto assets. One of the badly hit is the Circle’s USDC stablecoin.
In the last 30 days, the USDC coin has lost about 20% of its market capitalization. The market capitalization fell from $53.3 billion to $43.9 billion.
On the 26th of September, over $5 billion worth of USDC was significantly withdrawn. Recall that this stablecoin reached a market cap of $55.8 billion in July.
It has since then lost a chunk of its market cap.
How USDC Coin Lost 20% Of Its Market Cap
Since July, shortly after reaching its peak, USDC has started losing its presence in the market. However, the main cause of loss is the freezing of coins linked to Tornado cash addresses.
About 75,000 USDC linked to 44 Tornado cash addresses were frozen, leading to controversies. This tweet by “Banteg” shows that an additional 149 coins donated to the Tornado project were also frozen.
Circle attributed the freezing to the US Treasury department sanction of Tornado Cash. The stablecoin lost the community and stakeholders’ sympathy due to this funds freezing.
Considering it violated the fund owners’ rights, the protocol was met with backlash and massive withdrawal. Some blockchain protocols, such as MakerDAO, also expressed their displeasure.
It is important to know that USDC backs a large part of the MakerDAO reserve. MakerDAO went further by hinting at the need to discontinue its dependence on the stablecoin.
Another factor responsible for this loss is the market dominance battle. Binance champions this battle to ensure its stablecoin dethrones USDC and becomes the second most valuable.
Reports show that Binance is succeeding in this pursuit. Bitcoin’s BUSD has grown by 22% in the last few months from about $17.64 billion to $21.62.
BUSD currently sits behind USDT, while USDC incurred the loss. Similarly, two notable exchange platforms delisted the stablecoin in September.
Binance and WazirX delisted several stablecoins that included USDC, USDP, and TUSD. This move by WazirX is expected to push for the wide adoption of Binance (BUSD).
Jeremy Allaire of Circle, however, said Binance’s actions would not affect USDC. Barely weeks after the delisting, Circle’s stablecoin has been hit but still maintains its top 5 positions.
Conclusion
Several factors have contributed to losing about 20% of the USDC market cap. The single-day withdrawal of about $5 billion contributed to a 9.2% loss in the total market cap.
The delisting by Binance and WazirX accounts for a 6% loss. Experts opine that Circle must regain investors’ and payment platforms’ trust to bounce back.
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