Why Tether competitor USDC can outwit the bear market

• USDC has recovered from its lows • Stablecoin takes market share from Tether • Political tailwind drives the market

The USD Coin (USDC) was introduced in September 2018. Since then, the stablecoin has had an eventful history and even temporarily lost its link to the US dollar. Recently, however, the market has been clearly positive.

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In November 2023, the market capitalization of Circle's USD Coin USDC had fallen to $24.1 billion. But the past year brought a strong recovery for the entire crypto market and also the stablecoin market. Between August 2023 and August 2024, the entire stablecoin market grew from $121 billion to $224 billion, according to an article on the crypto website CoinMarketCap. For the USD coin, this was reflected in an enormous increase in the supply side: with a market capitalization of currently around $56.2 billion (as of February 26, 2025), the losses from the bear market have been made up for, the crypto experts' article continues.

Although Tether's stablecoin, USDT , remains far ahead in terms of market capitalization - the most recent supply was 141.91 billion US dollars - USDC has managed to narrow the gap to the best-known stablecoin. According to data from DefiLlama, USDC's market share has increased from around 19.4 percent to 25 percent within a year.

The fact that stablecoins have been able to achieve such strong growth in recent months is largely due to political circumstances. Cryptocurrencies were already a central topic during the US election campaign, and since Donald Trump took office, the discussion has revolved around regulatory issues in the sector in general and stablecoins in particular. Current government officials, including David Sacks, who advises the government on crypto issues, see stablecoins as a way to support the US dollar's leading role in the world. "Stablecoins have the potential to ensure the international dominance of the US dollar and increase the use of the US dollar as the world's digital reserve currency. This could create demand for US government bonds in the trillions, which could lower long-term interest rates," Sacks said in a press conference in early February.

At the same time, a bill was introduced called the "Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act", introduced by Republican Senator Bill Hagerty, which is intended to establish the criteria for stablecoins. Stablecoins with a market value of over ten billion dollars are to be placed under the supervision of the US Federal Reserve - this would currently affect Tether and the USDC. According to the bill, coins below this limit will be monitored by the respective states.

"Here in America, the tide has turned in favor of digital assets. I am pleased to lead my colleagues on the GENIUS Act, which will help make our country a positive environment for stablecoins and digital assets," Hagerty said as he introduced the bill to create a regulatory framework.

The tide has turned in favor of digital assets here in America. I'm pleased to lead my colleagues in the GENIUS Act, which will help make our nation a positive environment for stablecoins and digital assets. pic.twitter.com/osNj1t7Qtj

- Senator Bill Hagerty (@SenatorHagerty) February 4, 2025

In addition to current political developments, there are other price drivers for the stablecoin market. Demand from institutions, traders and retail customers remains high, as the crypto exchange Coinbase emphasizes. "USDC drives trading of over 200 USDC pairs on Coinbase and has contributed to approximately tenfold growth of USDC on Coinbase over the past two years. As the primary collateral and sole settlement asset used on the Coinbase International Exchange, USDC is a critical component of global markets," Coinbase continues.

editorial team of finanzen.net