Weeks after the failure of a series of US banks as well as the Credit Suisse chaos, the crypto market has considerably recovered but the same cannot be said for a prominent stablecoin that has served as a backbone for DeFi trades – USDC.
The confidence in Circle-backed stablecoin remains severely battered as investors continue to flee to Tether (USDT), the controversial stablecoin, in search of a safety net amidst the turmoil.
USDC’s market cap was down by over 42% to $33.2 billion from its all-time high of nearly $57 billion last June. The downturn was due to a $3.3 billion exposure to Silicon Valley Bank (SVb), which temporarily dragged the token to 88 cents instead of its usual one-dollar price.
Its parent firm, Circle, expanded its ties with BNY Mellon to assist with USDC redemption, which already provides custody services for its reserves. A few days later, the firm revealed transferring “substantially all” the cash portion to the custodian bank except for limited funds held at transaction banking partners. While these measures helped the token to regain its peg, the massive outflows continued.
Since SVB’s collapse on March 10th, net outflows of USDC have exceeded $10 billion. Its rival USDT, on the other hand, has been hovering near its record highs of nearly $80 billion in market cap, reaching its most significant market share since May 2021. USDT now represents 60% of all stablecoins in circulation
Among other stablecoins, BUSD suffered a similar fate plunging to $7.69 billion from its ATH near $30 billion. The figures reflected a decline of over 67% in less than four months.
Circle has been pushing for USDC’s expansion across several blockchains. Earlier this week, the stablecoin issuer announced the expansion of the token to Cosmos via the Noble network.
While the specifics surrounding the launch have not been disclosed yet, the team behind Noble asserted that USDC will be the first native, fiat-backed stablecoin that is highly liquid and fully collateralized on a Cosmos Inter-Blockchain Communication Protocol-connected network.
The announcement further stated that over 50 IBC-enabled blockchains will be able to access the stablecoin for the first time.
“This integration will catalyze hundreds of millions of dollars in liquidity over the coming months in Cosmos, and will seek to rectify the challenges that users and appchains face when interacting with bridged assets sourced from other ecosystems.”