Understanding the Latest Data on Stable Coin Supply: USDT, USDC, and BUSD

According to reports, according to the latest data from blockchain analysis company Glassnode, the supply of USDT has continued to rise since the FTX crash (reaching over $80 billion at the time of writing), currently accounting for 63.7% of stable currency capital. Meanwhile, the second ranked stable currency, USDC, has seen a net redemption of $10 billion (-23%) since it briefly decoupled from the US dollar during the bankruptcy of Silicon Valley Bank last month. Similarly, after the news of Paxos ceasing to issue BUSDs in February spread, many investors redeemed BUSDs or converted them into other assets, resulting in a decrease of -52% in the total supply of BUSDs, falling to the $7 billion range.

Data: USDT accounts for 63.7% of the total capital of stable currency

Stable coins are digital assets designed to maintain a stable value, typically pegged to a fiat currency like the US dollar. These coins enable traders and investors to execute transactions quickly, safely, and with minimal price fluctuations. Among the most popular stable coins in the market are Tether (USDT), USD Coin (USDC), and Binance USD (BUSD).
According to the latest data from Glassnode, a blockchain analytics firm, the supply of USDT has been on the rise since the FTX crash. Despite the ongoing controversies surrounding Tether’s collateral backing and transparency issues, the stable coin has been dominating the market, accounting for 63.7% of the stable currency capital. In contrast, USDC has been experiencing a net redemption of $10 billion (-23%) since it decoupled momentarily from the US dollar during Silicon Valley Bank’s bankruptcy. Similarly, the news of Paxos ceasing to issue BUSDs in February led to a significant decrease in BUSD supply by -52%, dropping to the $7 billion range.

Why Is USDT Supply Increasing?

The surge in USDT’s supply can be attributed to several factors. First, Tether remains the preferred medium of exchanging value for traders and investors seeking to shield their assets from market volatility. With the current global economic uncertainties, a lot of investors are looking for safe-haven assets, which has resulted in an increase in Tether demand.
Second, USDT has a relatively stable market cap, which makes it less vulnerable to the volatility and fluctuations of most cryptocurrencies in the market. This further reinforces its reputation as a reliable stable coin, given that it’s backed by the US dollar at a 1:1 ratio.
Lastly, Tether has been working hard to improve its transparency and reputation by providing more information on its reserves and operations. The company recently revealed that its reserves consist of cash, cash equivalents, and other tangible sources, including bitcoin and other crypto assets.

What Happened to USDC and BUSD?

On the other hand, USDC has been experiencing a net redemption of $10 billion (-23%) due to its brief decoupling from the US dollar following the bankruptcy of Silicon Valley Bank. USDC is one of the most reliable and transparent stable coins in the market, backed by cold storage reserves and rigorous auditing standards.
Similarly, the news of Paxos ceasing to issue BUSDs in February led to a significant decline in BUSD supply by -52%, dropping to the $7 billion range. BUSD is a stable coin issued by Binance as part of its effort to facilitate fast and low-cost payments.

Conclusion

The stable coin market is an essential component of the crypto ecosystem, especially for traders and investors looking to avoid market volatility. While Tether (USDT) continues to dominate the market, USD Coin (USDC) and Binance USD (BUSD) have faced supply and redemption issues over the past few months. Nonetheless, the perceived stability and reliability of these stable coins will continue to attract investors who want to engage in transactions without risking significant price fluctuations.

FAQs:

Q: What is a stable coin?
A: A stable coin is a digital asset designed to maintain a stable value, usually pegged to a fiat currency like the US dollar.
Q: Why is USDT supply increasing?
A: The surge in USDT’s supply can be attributed to the ongoing global economic uncertainties and the perceived stability of the coin.
Q: Which stable coin is the most reliable and transparent?
A: USD Coin (USDC) is considered one of the most reliable and transparent stable coins in the market, backed by cold storage reserves and rigorous auditing standards.