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USD coin (USDC), a stablecoin issued by the American company Circle Financials Ltd, takes the lead from its main rival, Tether (USDT), regarding institutional adoption, according to on-chain data.

USDC daily transfer volumes are higher

The market capitalization of USDC tokens in circulation stands at around $44 billion compared to $65.42 billion for USDT. However, the daily transfer value of USDC on the Ethereum blockchain has been consistently higher than that of USDT throughout 2022, according to data from Glassnode.

For example, as of November 22, USDC’s daily transfer was around $14 billion compared to USDT’s $5 billion.

USDC vs USDT daily transfer volume. Source: Glassnode

In other words, USDC users make relatively higher capital transfers than USDT users, suggesting that USDC is increasingly the stablecoin of choice among net worth entities. high, including institutional whales, hedge funds, family offices, crypto exchanges, and more.

Related: 82% of Tether reserves held in ‘extremely liquid’ assets, attestation says

Furthermore, USDC leads USDT in terms of supply weight in smart contracts as of November 22. Notably, the former accounted for 33.75% of the total locked stablecoin supply staking pools. By comparison, the USDT bid is around 12.50%.

USDC versus USDC bid in smart contracts. Source: Glassnode

But the higher daily transaction count against USDC suggests that Tether is more likely used for retail and transfers such as remittances.

Number of daily transactions between USDC and USDT. Source: Glassnode

On the other hand, USDC is emerging as a top stablecoin choice for tech-savvy institutional traders who lock their funds into staking contracts to earn yield.

This is also reflected in USDC’s lower daily active address count of 40,245 versus USDT’s 73,000, as recorded on November 21.

Daily active addresses USDC vs USDT. Source: Glassnode

Additionally, crypto trading platforms implementing so-called proof of reserves after the FTX collapse appear to be holding more Tether on USD Coin, further signaling that USDT is likely more popular among retail traders.

These exchanges include Binance, KuCoin, BitFinex, ByBit, OKEx, and Huobi. Crypto.com reserves are the exception with more USDC than USDT.

Proof of reserves from Crypto.com. Source: CoinMarketCap.com

Tether Market Cap Drops After FTX Collapse

USDT’s market capitalization fell by nearly $4 billion after the FTX exchange collapsed nearly two weeks ago.

The reason may be due to Tether departs briefly of its valuation of $1, reaching 96 cents on November 10, after having frozen $46 million of USDT tokens associated with FTX.

Interestingly, USDC’s market cap increased by almost $2 billion after Nov. 10 when the FTX fiasco began.

USDT vs. USDC market cap performance over the past six months. Source: Messari

Tether has a history of breaking its peg to the US dollar during extreme market stress, but to a lesser extent in recent years.

For example, the token fell below 95 cents during the crypto market sell-off in May, coinciding with a spike in USDC market capitalization. This suggests that some investors have shifted their capital from Tether to USD Coin as the former lost its USD peg as seen below.

USDT/USDC three-day price chart. Source: Trading View

However, Tether returned to dollar parity within days, claiming that the tokens in circulation are supported 100% by reserves and indexed 1 to 1 with the USD.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.