Record Minting of USD Coin
On April 30, a staggering amount of over $3 billion worth of USD Coin (USDC) was minted in a single transaction, marking the highest level of USDC production ever recorded. This monumental minting event amounted to more than 26% of its market cap at the time, creating waves in the cryptocurrency market.
What Drives Minting?
Minting of USD Coin occurs whenever customers convert their U.S. dollars into this dollar-backed stablecoin. Whenever there’s a surge in demand for USDC, it leads to an influx of minting. This sizable addition wasn’t just a statistical anomaly; it coincided with a notable trend within the altcoin market, including well-known currencies like Ethereum (ETH) and Cardano (ADA).
Bitcoin’s Declining Market Dominance
As USD Coin made its grand entrance, Bitcoin’s (BTC) market cap dominance slipped to a mere 47.79%—the lowest it had been since August 2018. There was a time earlier this year when Bitcoin basked in the glory of over 70% dominance. However, the recent influx of altcoins has led to a ripple effect, diminishing Bitcoin’s stronghold in the market.
Significant Growth in USDC Market Cap
The minting spike saw USD Coin’s market cap leap from $11 billion to nearly $14.4 billion almost overnight. Now, USDC holds approximately 28% of the market cap of Tether (USDT), which has more than $50 billion in circulation. This is a remarkable evolution, considering that just back in August 2020, USDC’s market cap was only a fraction of that of Tether. This shift suggests that traders are increasingly turning to USDC, possibly at Tether’s expense.
Circle’s Partnership with Signature Bank
To bolster its credibility and financial backing, Circle—the company behind USD Coin—recently tapped the New York-based Signature Bank. This partnership is aimed at ensuring that USDC is appropriately backed by reserves that include cash and short-term U.S. treasury bonds. Such measures aim to maintain trust and stability in what is becoming a heavily utilized component of the cryptocurrency market.
