The constant price volatility in the crypto market significantly affects Circle’s stablecoin, USD Coin (USDC). Its recent display of whale addresses is making a more southerly move. USD Coin hit a nearly two-year low in its primary wallet address.
according to the data of glassnodeUSD Coin Metrics, a crypto analytics company, is becoming less impressive. For example, the stablecoin has recently suffered selloffs and declines, reducing its market cap.
A report on the second-largest stablecoin by market cap showed that the US Treasury Department’s approval on Tornado Cash is a contributing factor against USDC’s performance. The approval not only created a loophole for the decline in USDC capitalization, but it also affected its top competitor, Tether.
Following the approval of Tornado Cash, Circle, the parent of USD Coin, froze approximately 75,000 USDC tokens. The coins were minted at some of the addresses associated with Tornado Cash.
This action has reduced the market cap of USDC. But Tether got the opposite performance. As a result, USDT markets saw an increase of around $2 million a few days after the US Treasury’s approval.
Many commentators in the industry are comparing the rise and fall of the market cap for USDT and USDC. Most believe that investors have switched from USDC to USDT. However, data from on-chain analytics providers indicated a massive sell-off over the past two weeks.
Furthermore, Glassnode data confirmed that USDC’s seven-day moving average exchange deposits hit a 17-month low of 138,250. This was against the same price as the low of 138.810 recorded in March 2021.
I $USDC Number of Exchange Deposits (7d MA) currently at 17 month low 138.250 . has reached
Last 17 month low of 138.810 was seen on 23 March 2021
View metrics: https://t.co/yhG6sKrvi6 pic.twitter.com/tB9ZoQVs7j
— glassnode alerts (@glassnodealerts) 22 August 2022
Also, there is a sign that the holding of the top 1% of addresses for USDC has reached 87.667%. This equates to a 22-month low for the stablecoin.
All is not lost for USDC
However, USDC saw an increase in one aspect of its performance despite its lower market cap. It also increased its weekly average transaction volume, reaching a three-year high. Price showed up to 228,721.050 USDC token. This latter increase is higher than the previous increase recorded in June this year at 226,056.588 USDC.
I $USDC Average trading volume (7d MA) just reached a 3-year high of 228,721.050 USDC
The previous 3-year high of 226,056.588 USDC was seen on June 19, 2022
View metrics: https://t.co/VUwnIn7YLP pic.twitter.com/FDrgkDUIuZ
— glassnode alerts (@glassnodealerts) 22 August 2022
There has been much hype on USDC to compete with USDT as the leading stablecoin of the year by market cap in July 2022. USDC moved within $11 billion of Tether’s market cap. But it has lost its previous gains after the Tornado Cash event.
Tether has yet to comment on its position on whether to freeze USDT tokens associated with Tornado Cash. However, a potentially negative legal ramification exists for firms that forgo assets associated with approved crypto mixer platforms.
Featured image from Pixabay, Charts from TradingView.com