Why USD Coin [USDC] may not yet be ready to overtake Tether [USDT]


Tether [USDT] must surely feel USD Coin [USDC] breathing down its neck in terms of market cap ranking as investors look at the wreckage of TerraUSD [UST] and re-assess their stablecoin preferences. To that end, two metric-based milestones go a long way in telling us about the demand for USDC – and its potential future.

The horse has left the stable

Glassnode reported that USDC liquidity on Uniswap has been hitting lows last seen around 16 months ago. Why is this significant? Well, falling liquidity on Uniswap is a sign of high demand and could indicate that users are gravitating towards stablecoin.

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On the other hand, it’s important to look at all the evidence. Santiment data showed that USDC supply on exchanges has been rising since about 17 May, even after USDC’s price came back to normal levels once more.

Source: Santiment

To compare, UST supply held on exchanges has plunged since UST’s de-pegging. But while you might assume that the numbers are now close to all-time highs, the truth is that UST supply has only risen to levels last recorded towards the end of April.

Source: Santiment

Awake or not, here I come!

At press time, USDC velocity was falling, suggesting that fewer USDC stablecoins were moving between addresses. However, this doesn’t mean that nothing is changing for investors.

Source: Santiment

In fact, is more USDC leaking out of the whales’ grip and flowing to more everyday investors? Glassnode data showed that the top 1% of addresses were only holding about 91.226% of the USDC supply. While this may still seem like a lot, it is in reality a 13-month low.

A report by Glassnode on 16 May also took note of USDC’s rising role in the crypto ecosystem, stating,

“USDC reversed the trend of supply contraction that has been in place since late Feb, expanding by $2.639B.”

It added,

“Given the dominant growth of USDC over the last two years, this may be an indicator of changing market preference away from USDT and towards USDC as the preferred stablecoin.”




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