Cointelegraph Consulting: Stablecoin activity drops after May peak

Cointelegraph Consulting: Stablecoin activity drops after May peak


Stablecoin usage lost steam amid the recent crypto market downturn. From peaking at nearly $2 billion on May 19, the daily transaction volume has fallen off its 2021 average by about 60%. The significant drop begs the question about stablecoin activity in the current market environment.

Unsurprisingly, the two cryptocurrencies that remain in a tight race for stablecoin dominance are Tether (USDT) and USD Coin (USDC). However, the market holds a fine distinction between the two, particularly with their corresponding reserve holding.

Credit rating agency Fitch Ratings even warned recently about Tether’s risk triggering a destabilization in short-term credit markets, since its reserves are not all in cash. On the other hand, Fitch cites USDC as an example of a fully backed safe asset since it keeps the United States dollars on a one-to-one basis in custody accounts.

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Stablecoin analysis

Still, users flock to Tether for a number of purposes. Data from Covalent reveals that Tether exceeded the total transactions of USDC

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