USDC Surpasses USDT to Become the Largest Stablecoin by Transaction Volume

Sentiment Status: Positive

While Tether (USDT) is primarily used for storing dollar value abroad, USDC is gaining traction for everyday transactions within the US.

A significant shift within the stablecoin market. USD Coin (USDC), managed by Circle, has recently outpaced Tether (USDT) to become the new leader in transaction volume.

Data from Visa and Allium Labs indicate that USDC's transaction volume reached an impressive $455.5 billion last week, starkly contrasting with USDT's $88.5 billion. Since the onset of 2024, USDC has commanded approximately 50% of the entire stablecoin transfer volume, a domain previously dominated by USDT, which still holds a 69% market share by capitalization according to DefiLlama.

Experts believe that the shift in volume from USDT to USDC can be attributed to several factors. Noelle Acheson, a renowned cryptocurrency analyst, suggests that USDT's primary use as a dollar store of value outside the U.S. contrasts with USDC's increasing adoption for regular transactions within the country. Additionally, the recent reintroduction of cryptocurrency transfers by Stripe, which now accepts USDC across multiple networks including Solana, Ethereum, and Polygon, has further bolstered USDC's position.

Circle's strategic maneuvers, such as partnering with BlackRock to launch a tokenized fund at the end of March, have enhanced USDC's appeal. This collaboration allows clients to convert BUIDL into USDC on the secondary market, offering a practical utility that extends beyond mere transactional capabilities.

The journey for USDC hasn't been without challenges. Following the US banking crisis last year, USDC's circulation plummeted from $56 billion to $23 billion in December 2023 after exposure to Silicon Valley Bank's collapse was revealed. However, the stablecoin has shown resilience, with its value rebounding to $32.8 billion recently.

Visa's Head of Crypto, Cuy Sheffield, highlights the complexity of interpreting stablecoin transaction data, noting that it can be skewed by manual transactions or programmatically through bots. When adjusting for such distortions, the total transaction volume shows a more realistic figure, underscoring the need for careful analysis in this rapidly evolving market.

USDC's ascension as the leader in transaction volume not only challenges the long-held dominance of USDT but also signals a broader shift in the stablecoin market. With strategic partnerships and a strong focus on serving both domestic and international markets, USDC is poised to play a crucial role in the future of cryptocurrency transactions. This change is a testament to the dynamic and responsive nature of the crypto ecosystem, adapting continually to meet the needs and preferences of its users.