USDC’s Market Cap Falls to an 18-Month Low Despite Smart Contract Demand
Circle’s USDC, a stablecoin pegged to the US dollar, has had a rough time in the market lately. Here are the key takeaways from recent developments.
USDC’s Market Cap and Transaction Volume Continue to Suffer
USDC had robust outflows in the last two weeks of March, which initially triggered a depeg. It eventually regained its dollar peg and has since then remained stable until press time. However, it continued to experience outflows, which have shrunk its market cap by a sizable margin so far. USDC’s market cap fell as low as $32.50 at the end of March, an 18-month low.
According to Glassnode, USDC’s transaction volume has also been severely affected, falling to a nine-month low. A look at USDC’s transaction volume metric on Ethereum [ETH] confirmed a slowdown, as the stablecoin’s daily transaction volume fell below $2 billion in the last five days.
Smart Contract Demand Bounces Back
Despite USDC’s poor market performance, there is one area that showed promise: the percentage of USDC locked in smart contracts has bounced back and was at an 11-month high at press time. This observation confirmed that USDC was recovering, especially in DeFi. This may help soften its fall and perhaps even help turn things around in the mid to long term.
Exchange Flows and Address Activity
Exchange flow data revealed that there have been significant exchange flows in the last seven days. This included healthy outflows, which may suggest demand recovery. The exchange flows were backed by noteworthy address activity. The number of daily active addresses trading with USDC dropped since the incident in March, but USDC’s recovery has inspired confidence among users.
Some may view USDC’s depegging as a good sign because it exposed a point of weakness due to SVB’s exposure. However, that point of weakness has not been dealt with, and USDC has regained its peg. A more favorable outcome than UST’s situation months prior.
Ecosystem
Research
News Network
About