- The dominance of stablecoin, USDC peaked today at 3.84%
- USDC dominance increased by 17% since UST depegged
- The stablecoin’s dominance started making remarkable increase on May 7
- That was the same day UST first depegged
USDC dominance reached an ATH of 3.84% today. This was seen from Tradingview data, which shows that USDC.D started increasing appreciably on May 7, the same day that UST, the stablecoin built on the Terra blockchain depegged.
Catalyzed By Terra USD Depeg
Since then, USDC.D has been on the increase and reached the highest value of 3.84% today, May 10, 2022, at 00.20 am. This is a 17% increase in the dominance of USDC, which is the second stablecoin by market capitalization. The stablecoin has a market capitalization of $48,414,831,719, second only to Tether (USDT) with a market cap of $83,172,105,218 as seen from data from Coinmarketcap.
Prior to the depegging of UST, USDC dominance mostly hovered between 3.11% and 3.15%. However, from May 7, the USDC dominance grew steadily until 00.25 am today, May 10.
One of Several Stablecoins
USDC dominance (USDC.D) has not been much of an issue to most cryptocurrency users, since there are several stablecoins to choose from. These coins act mainly as safe haven for traders to hedge trades from the volatility of the coin market.
#USDC dominance is in a bearish rising wedge on the weekly timeframe. There is also a big bearish divergence visible
— BTCfuel (@BTCfuel) May 10, 2022
The dominance of stablecoins such as USDC generally reflects the state of the coin market.
Investors generally buy more of stablecoins when the confidence in the coin market is low, such as in a down trend, when they need to protect the profits that have been made. But when the market is in an uptrend, funds move from stablecoins to cryptocurrencies such as Bitcoin and altcoins, which are volatile and can be used speculatively.
From the spike in the value of USDC.D, we can infer that there are more users opting for the stablecoin in lieu of UST. More investors that hedge with Terra USD are resorting to USDC. This spike may have been incentivized by the recent bear market which naturally causes a net fund movement to stablecoins.
Restored Confidence in UST?
At the time of filing this report, USDC.D was 3.61%. It is possible that the repegging of UST is restoring confidence in UST. Indicators show that USDC.D is in an uptrend. The implication is that more funds are moving into stablecoins and away from Bitcoin and altcoin. This means that the price of assets will continue downtrend. USDC.D chart shows RSI of 68. This could herald a trend reversal for USDC dominance.
Earlier today, Binance temporarily suspended the withdrawal of UST, citing the slowness of the Terra network.