YOUSDC’s loss becomes USDT’s gain after market events in March.
The tides are calm at the moment, but there may be even more stablecoin risk ahead.

About two weeks have passed since USDC lost its USD peg due to turmoil in SBV. There has been a significant realignment since then as many crypto users shifted their focus from USDC to other stablecoins.

The impact on Circle’s USDC is particularly evident in its deposits and withdrawals. The latest data from Glassnode shows that exchange deposits are currently less than half of exchange withdrawals.

Source: Glassnode

The lower exchange deposits reflect the shattered confidence in the cryptocurrency, due to user migration to alternative stablecoins.

On the other hand, USDT flows were more pronounced. A look at USDT flows over the past two weeks shows that USDT exchange deposits peaked on March 17, a few days after USDC lost its peg. This shows the robust liquidity flow from USDC to USDT.

Source: Glassnode

USDT also experienced a slowdown in currency outflows and inflows as the liquidity stream came into Bitcoin and altcoins. The difference between the demand for USDT and USDC was further evident in the market cap directions of both stablecoins.

For perspective, USDC’s market cap fell $9.96 billion from its peak in March to its current low. Meanwhile, USDT’s market cap grew nearly $9 billion from its 4-week low to its current high.

Source: Glassnode

USDC is not the only stablecoin to have been negatively impacted by the March market events. A March 26 glassnode tweet revealed that BUSD transfers are currently at an eight-month low. Meanwhile, liquidity on Uniswap fell to a four-month low.

Is the stablecoin risk over?

If there’s been one big takeaway from the crypto market in recent months, it’s the unexpected. This means there could be some risks later on that could affect stablecoins.

Some of those risks may come from governments pushing aggressively against cryptocurrencies, as has been the case recently.

USDT is now the most popular stablecoin by a large margin thanks to its SVB issuance. However, this also means it could be the next big target for future attacks. Meanwhile, USDC has restored its peg, but some damage has already been done.

This post USDC’s woes are far from over as the market cap falls. Is USDT leading

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