Not only Bitcoin and other altcoins are suffering from the current bear market, but also stablecoins. Circle’s USDC stablecoin, for example, has lost billions of USD in capitalization in just a few weeks.
The market capitalization of Circle’s USDC stablecoin has dropped dramatically since the Tornado Cash scandal.
In the past month, USD Coin(USDC) has lost nearly 20% of its market cap, falling from $53.3 billion to just under $43.9 billion.
On September 26th, nearly $5 billion was withdrawn from USDC in a single day, a loss of nearly 9.2%.
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This was the sharpest decline in USDC’s history. In July, Stablecoin peaked when it reached a market capitalization of USD55.8 billion
Although Stablecoin lost its presence in July, the decision to freeze over 75,000 USDC of funds associated with 44 Tornado Cash addresses was a crucial event. This caused Stablecoin to lose an enormous amount of likes, leading to backlash and mass withdrawals.
MakerDAO had also deposited a large TEction of its reserves in USDC and considered this intervention by Circle as a violation of its privacy rights. The project also talked about removing its dependence on USDC, saying that given USDC’s extreme degree of centralization, it could suffer the same fate as Tornado Cash-affiliated wallets at any time.
Although everything seemed to indicate that MakerDAVO was turning its back on USDC, yesterday they announced the approval of a new proposal to deposit USDC on Coinbase’s institutional custody platform and deposit up to $1.6 billion of their USDC reserves on Coinbase Prime to generate 1.5% in rewards.
While USDC’s capitalization continues to decline as the days go by, there are still large projects that continue to bet on recovery.
USDC also faces challenges around the ongoing battle for stablecoin market dominance led by Binance. The crypto exchange wants its stablecoin to be number two in the market, dethroning USDC.
Currently, BUSD has a market capitalization of $21.62 billion. Unlike USDC, Binance’s stablecoin has grown steadily by more than 22% since August 12.
Binance and WazirX also delisted USDC last month, after which USDC lost about 6% of its market cap.
While all of this does not bode well for USDC’s future, the stablecoin will likely manage to maintain its position among the top 5 cryptocurrencies. However, it needs to work hard to regain the trust of major crypto exchanges.
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