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Circle revamps its relationship with Coinbase; will USDC’s marketcap grow?
- USDC prospects improve as Coinbase and Circle cement their business partnership.
- Analyzing the benefits that USDC could leverage from the upcoming expansion.
There has been an ongoing stablecoin dominance battle between USDT and USDC. The latter may have just gained a competitive advantage following the latest development involving a partnership between Circle and Coinbase.
Coinbase revealed in its statement that it will work with Circle to explore more utility avenues and expand on USDC’s growing ecosystem. The U.S.-based crypto exchange reportedly secured a stake in Circle.
This highlighted Coinbase’s vested interest in USDC’s success. The announcement comes days after Coinbase announced its expansion into Canada.
Today Coinbase and @circle announced a few updates to USDC. Stablecoins will be a key component of a new updated financial system, and we look forward to helping unlock additional utilities and growing the USDC ecosystem. 🧵👇 pic.twitter.com/twkNRRVd0T
— Coinbase 🛡️ (@coinbase) August 21, 2023
So, why is this important for USDC? First, the stablecoin may have a chance at redemption in its battle for dominance against rival USDT. The latter has been gaining in marketcap in line with heavy demand but USDC’s marketcap has been declining.
Source: Glassnode
USDC’s marketcap has so far dropped by roughly $18.66 billion on a YTD basis. However, the number of addresses using the stablecoin has been on a steady uptrend and recently peaked at 11.79 million addresses. This growth trajectory might be about to go parabolic courtesy of Circle’s expansion plans.
According to the announcement, USDC will roll out six new blockchains on which it will be available natively. This growth could trigger a pivot in USDC’s market and more importantly, the level of utility. An outcome that may allow it to compete more effectively with rival stablecoins.
TL;DR: $USDC is launching on 6 new blockchains; @coinbase is increasing its support for stablecoins with an investment in Circle; Circle will take full control over USDC issuance and governance; Coinbase and Circle will also maintain a commercial relationship.…
— Circle (@circle) August 21, 2023
Will Circle dominate if the U.S. embraces crypto?
Circle’s partnership with Coinbase could also be considered strategic. Coinbase happens to be based in the U.S. where it is also regulated. Characteristics that are ideal when looking to expand in the West. There has been some speculation that the U.S. may embrace stablecoins if the government embraces a shift from the legacy financial system.
Interestingly, Coinbase noted that the partnership for USDC expansion would be part of an updated financial system. Note that this does not necessarily confirm the speculation. Nevertheless, the announcement marks an important growth milestone and may unlock more expansion opportunities for both Coinbase and Circle.
The budding business partnership between Circle and USDC comes at a critical point in the market. Analysts anticipate that the crypto market is at the tail end of its latest bearish cycle.
If this is true then the market might be headed for an explosion of demand sometime in the near future, in which case would could see a surge in demand for stablecoins as an on-ramp for crypto access.
