The stablecoins like USDT, USDC, etc experienced a wider adoption throughout the year 2022 as the bear market restricted the rally to a large extent. However, as 2023 began with a kickstart of giant price action, the demand for these stablecoins dropped. Therefore, the dominance of these tokens is plunging by a huge margin and presently testing one of the important support levels.
Moreover, the strength of the rally also appears to be extremely weak and hence it may result in an explosive move toward the south. Moreover, the Trend Breakout Indicator(TBO) substantiates the weakening of the rally as it indicates the beginning of a deep bearish trend.
The combined market cap of the top 2 stablecoins has plummeted from around 15% and currently hovering just above 10%. If the levels fail to sustain above these crucial levels, then a continued downtrend may slash the combined market cap below 10% to reach 9.69%.
However, considering the individual market cap of both USDT and USDC, the USDC market capitalization has been slashing hard and faced rejection from $70 billion to drop below $65 billion. Meanwhile, the USDT’s market cap has been witnessing significant growth in the past week rising from $66.29 billion to reach levels just above $68 billion.
Therefore, it can be considered as the market participants are again betting on USTD as the USDC’s market cap is plunging comparatively. Therefore, the USDT is believed to maintain its dominance against USDC while the bullish market sentiments may prevail for the cryptos in the longer term.
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Sahana Vibhute
A passionate cryptocurrency and blockchain author qualified to cover every event in the crypto space. Researching minute occurrences and bringing new insights lie within the prime focus of my task.
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The cryptocurrency landscape is virtually unrivalled in its diversity and dynamism, as well as its potential to offer investors, entrepreneurs and developers numerous opportunities. But if we’re to look at the outlook for 2021, there’s one particular crypto asset that appears to be primed to take center stage. That asset is, of course, stablecoin dominance.
Stablecoins, for those unfamiliar, are cryptocurrency tokens issued and backed by fiat currency—think the U.S. dollar, for example—which are held in reserve in order to maintain the token’s fixed exchange rate to the currency. They are one of the main innovations in the crypto space, and have a range of potential uses from trading and exchange, to payments, remittances and investments.
Stablecoins, such as Tether, USDC, and Paxos Standard, are seeing increasing use by both institutional and retail investors, with total activity being tracked and monitored by multiple exchange networks across the world. This is resulting in growing credibility and trust among users and investors, thereby leading to increasing levels of adoption and usage.
In terms of 2020 figures, the year closed with an impressive jump of 50% in stablecoin ownership, outperforming the overall crypto industry. This looks set to continue into 2021, and with it could potentially offer the opportunity for more players to join the fray. In particular, with the increasing acceptance of cryptocurrencies for payments, especially in developing countries, more crypto businesses and entrepreneurs may eventually find themselves utilizing stablecoins such as USDC and Tether in order to manage their operations.
The potential for stablecoins to further expand their opportunities and utility within the cryptocurrency industry is, therefore, immense. It will be interesting to witness this trend over the course of the next few months, and to see whether their potential to facilitate more trading advantages, investment opportunities and general market liquidity can be successfully tapped. If successful, it could result in the stablecoin ‘dominance’ gaining further momentum in 2021.
