2024-05-01
USDC, despite having a lower market capitalization compared to USDT, has taken the lead in transaction volume.
Visa's adjusted stablecoin metric reveals that USDC recorded an impressive $455.51 billion in transaction volume last week, while USDT only registered $88.52 billion.
Since the beginning of 2024, USDC has dominated with 50% of total transactions, marking a significant shift from the previous market dynamics where USDT was considered the dominant stablecoin.
Despite USDT's reported 69% dominance, USDC's performance stands out.
Noted crypto analyst Noelle Acheson suggests a reason for this shift, stating that "USDT is more held outside the US as a dollar-based store of value, while USDC is used within the US as a transaction currency."
Stablecoins like USDC and USDT aim to mirror the stability of fiat currencies, particularly the US dollar.
They play crucial roles in facilitating transactions within the crypto ecosystem, including cross-border remittances and token trading.
However, analyzing transaction data on public blockchains can be complex and potentially misleading.
Cuy Sheffield from Visa highlights that transactions can vary, initiated either manually by users or programmatically through bots.
When adjusting for bot-related activities, the total transfer volume over the last 30 days significantly drops from $2.65 trillion to $265 billion.
Furthermore, the rise of USDC follows a difficult period connected to last year's US banking crisis.
Its circulation dropped from $56 billion to $23 billion in December 2023 after the exposure of a $3.3 billion risk to Silicon Valley Bank. However, USDC has since rebounded to $32.8 billion in circulation.
In addition, Stripe, a prominent player in online payments, has recently reintroduced crypto payments, specifically choosing to support USDC.
This decision, along with PayPal launching its stablecoin PYUSD and Shopify enabling stablecoin payments, indicates a growing acceptance of stablecoins in mainstream transactions.
The integration of stablecoins is becoming increasingly prevalent, with their annual volume approaching parity with Visa within just six years. Stripe utilizes stablecoins as a settlement layer, allowing customers to make swift and cost-effective payments for services.
As Congress contemplates stablecoin legislation, the potential for further adoption looms large.
Proper regulation could expedite this adoption process, showcasing the capability of blockchain technology to power a new financial system.
