USD Coin (USDC), the second-largest stablecoin by market capitalization, has significantly increased its market share on centralized crypto trading platforms, doubling from approximately 5% in September 2023 to over 10%. This growth is attributed to rising trading volumes on platforms like Bybit, Binance, and Coinbase, alongside strategic partnerships and incentives.
Key Drivers of USDC's Market Share Growth
Bybit's Zero-Fee Trading Incentive
Bybit emerged as the largest market for USDC after introducing zero-fee trading for USDC pairs in February 2023. This incentive attracted traders, boosting USDC's adoption.
Binance's Relisting of USDC
Binance's decision to relist USDC following legal issues with Binance USD (BUSD) played a pivotal role in expanding USDC's market presence.
Coinbase's Interest Rate Increases
Coinbase progressively raised interest rates on USDC holdings from 2% to 6% in 2023, encouraging users to hold the stablecoin for yield.
Strategic Partnerships
Circle, USDC's issuer, partnered with major financial institutions like SBI Holdings and secured licensing in Singapore, enhancing USDC's credibility and circulation.
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Challenges Facing USDC
Despite its growth, USDC's circulating supply remains below its all-time high of $45 billion. Circle cited factors such as:
- Rising interest rates
- Regulatory crackdowns
- Bankruptcies and fraud
Additionally, USDC faced a crisis in March 2023 when Silicon Valley Bank's collapse caused a temporary depeg and massive outflows.
Circle's IPO Plans
Circle recently filed for an initial public offering (IPO) with the U.S. SEC, signaling confidence in its future growth.
FAQ Section
Why did USDC's market share grow?
USDC's share grew due to zero-fee trading on Bybit, Binance's relisting, Coinbase's interest rate hikes, and Circle's partnerships.
What caused USDC's supply to decline?
Higher interest rates, regulatory pressures, and the Silicon Valley Bank collapse contributed to reduced supply.
What is Circle's next step?
Circle aims to go public via an IPO, as disclosed in its SEC filing.