Whales redirected to USDC after USDT de-peg crash?

There has been a major shift in the mindset of crypto whales about choosing between the two current market leaders in stablecoins, Tether (USDT) and USD Coin (USDC), after the Terra USD event.

According to data from CoinMetrics, a popular blockchain analysis firm, it shows that the number of wallet addresses on Ethereum containing more than $1 million USDC has surpassed the number of wallets containing USDT, establishing solid evidence confirming USDC has become the preferred stablecoin on Ethereum, not USDT.

This happened amid the market turmoil that was not yet overdue to the LUNA-UST event, which dragged the value of the two coins down to near zero within just a few days, resulting in USDT being quickly lost peg with USD. Although the USDT price quickly recovered to 1 USD, the fluctuation of the market-leading stablecoin is causing confusion for investor confidence.

Whales are the largest cryptocurrency holders – institutional investors, exchanges, and wealthy individuals – capable of moving massive sums of tokens and influencing market pricing. Analysts regularly monitor their behavior to identify trends and forecast major price movements.

Data from CoinMetrics, a blockchain analysis firm, shows wallet addresses on the Ethereum blockchain that hold more than $1 million USDC surpassed the number of wallets that hold USDT, still the largest stablecoin by market cap.

Since the fall of the $18 billion UST stablecoin and the USDT’s peg to the dollar, USDC, the second-largest stablecoin, has gained market share.

CoinMetrics examined blockchain data since May 9, when the UST currency lost its peg to the US dollar. The company discovered 147 Ethereum wallet addresses that increased their USDC balances by at least $1 million while lowering their USDT balances by at least $1 million.

There were 23 of them that added at least $10 million USDC and disposed of at least $10 million USDT. According to the research, many of these addresses are exchanges, custodial services, or decentralized finance systems.

The report also said USDC’s advantage over Tether’s USDT in so-called free float supply – the number of tokens that investors hold – on the Ethereum blockchain hit an all-time high on Tuesday among all holder groups.

Tether, the corporation behind USDT, cut its commercial paper holdings by 17% in the first quarter, from $24.2 billion to $20.1 billion, according to its most recent quarterly attestation report of the assets underlying the stablecoin. It did, however, state that $286 million of its assets were invested in non-US Treasury bonds with maturities of fewer than 180 days.

Since the UST debacle, which undermined investors’ confidence in the stability of stablecoins in general, USDT has seen $10 billion in redemptions. Redemptions reduced the overall circulating supply of USDT to $73 billion in 10 days, from $83 billion. During the same time period, USDC supply increased to $53 billion from $48 billion.

Amid the flurry of events, as UST’s worth dropped to nearly zero within days, USDT briefly lost its peg to the dollar. Even though its price quickly recovered to $1, the wobble renewed uncertainty about what assets back the value of USDT. Most decentralized finance (DeFi) transactions take place on the Ethereum blockchain, and USDC has been the stablecoin of choice in DeFi.

DAI, the most decentralized and overcollateralized stablecoin, for example, keeps USDC in its treasury rather than USDT. DAI, the currency of the blockchain network MakerDAO, has a market capitalization of more than $6 billion and maintains a 1:1 exchange ratio with the US dollar by amassing much more crypto assets than the market value of all DAI tokens in circulation.

Are the above reports enough to set the stage for USDC to overthrow USDT dominance?

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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