Stablecoin USDC Is Making a Comeback: Coinbase

• USDC supply has increased by over 14% since the start of December.

• The increase in liquidity is a sign of fresh capital inflows following the launch of spot bitcoin ETFs in the U.S.

• The stablecoin’s presence is growing in non-U.S. markets.

Circle’s USDC, the second-largest stablecoin by market cap, is making a comeback, with liquidity increasing worldwide and usage growing rapidly outside the U.S., leading to a sharp increase in supply in recent months, Coinbase (COIN) said in a research report on Monday.

“The supply of USDC has increased by 14.3% or over $3.5B since December 1, 2023, taking its total market cap to $28B compared to a smaller 8.7% growth for USDT over the same period,” analysts David Duong and Li Liu wrote. USDT is Tether’s rival dollar-based stablecoin and is by far the largest, touting a $98 billion market cap.

USDC’s increase in liquidity reflects the “overall pickup in both retail and institutional demand as crypto has moved into a new phase of its market cycle after the launch of spot bitcoin ETFs in the U.S., contributing to fresh capital inflows,” the authors wrote.

A

stablecoin

is a type of cryptocurrency that’s typically pegged to the U.S. dollar, though some other currencies and assets such as gold are also used.

USDC is also building a larger presence in non-U.S. markets, the report said, noting that the stablecoin has increased its share of spot and derivatives activity fivefold, albeit to only 4% of total

centralized exchange

volumes (CEX) globally.

As well as the spot ETF catalyst, the growth in liquidity was driven by the start of

Coinbase’s international exchange

and the relisting of USDC trading pairs on rival exchange Binance late last year, the report added.