In the world of cryptocurrencies, where price volatility is the norm, there exists a currency that not only maintains its value but also gains in popularity. This refers to USD Coin (USDC), the second largest stablecoin, a stable digital currency. In recent months, USDC has seen a significant increase in market share on centralized cryptocurrency trading platforms, doubling its presence from about 5% in September 2023 to over 10%.
USD Coin, also known as USDC, is a digital currency that maintains price stability by being directly linked to the value of the US dollar. Unlike other cryptocurrencies, such as Bitcoin or Ethereum, USDC offers a safe haven in times of market uncertainty, while maintaining the flexibility and speed of transactions characteristic of the digital world.
A key moment for USDC was the increase in its popularity on the Bybit platform, which introduced zero fees for trading pairs with USDC in February of the previous year. This move attracted a significant number of new users, eager for stability in the volatile world of cryptocurrencies.
Additionally, USDC’s return to the Binance exchange list, after legal issues related to Binance USD (BUSD), also contributed to its market share growth. Binance, being one of the largest trading platforms, provided USDC with new areas for expansion and increased visibility.
Coinbase, the largest cryptocurrency trading platform in the United States, in turn, increased interest rates for USDC, starting at 2% and gradually raising them to 6% over the past year. This strategy effectively motivated users to hold and invest in USDC, attracting additional liquidity and stability to the ecosystem.
It is also worth noting the partnerships of Circle, the issuer of USDC, with major financial institutions, such as Japanese financial giant SBI Holdings, and licenses in important jurisdictions, such as Singapore. These actions have contributed to increasing the circulation and presence of USDC in the global market.
Despite these positive changes, the current supply of USDC in circulation is significantly lower than its record value of 45 billion dollars. Circle attributes this decline to several factors, including rising interest rates, market regulations, bankruptcies, and fraud.
Last year’s problems with USDC, including the collapse of one of its banking partners – Silicon Valley Bank – led to a temporary loss of value equilibrium and a massive outflow of funds from this digital asset.
Despite these challenges, Circle recently announced plans to re-enter the stock market through an initial public offering (IPO), filed with the U.S. Securities and Exchange Commission.
In the face of all these changes, USDC is becoming an increasingly important element of the cryptocurrency ecosystem, attracting the attention of both individual investors and institutions. Its growing popularity and stability make it a key player in the rapidly evolving world of digital finance.
