It was just a little over a month ago, on December 5, 2021, that USD Coin (USDC) celebrated the $40 billion milestone, and already the dollar digital currency has reached a $50 billion market cap as of January 31, 2022. As USDC continues its remarkable trajectory, growing 10x over the course of 2021, people want to know what’s driving the growth and what’s next.
According to Circle’s internal data aggregations, USDC’s growth since 2021 extends beyond just hitting $50 billion in market cap.
In an always-on global economy, markets and individual’s financial needs do not take bank holidays. The advent of trusted digital currencies like USDC are enabling a wide range of use cases from a "flight to safety" during inflation, borderless transactions and payments to a medium of exchange in DeFi.
1. A Safe Haven for Your Money
We have seen increased adoption of assets like USDC as a "flight to safety", especially in countries where local currency is suffering from a valuation loss. With inflation rates in the United States at its highest levels in nearly 40 years, and potential rate hikes1 from the Federal Reserve, digital dollar currencies are also gaining momentum as viable alternatives to the dollar bill.
The potential of multiple rate hikes also gives USDC, a dollar-pegged stablecoin, the opportunity to capture the upside of a stronger valued dollar. Investors from foreign countries will likely want to capitalize and benefit from the strengthened dollar against weaker currencies by converting their fiat currencies to USDC.
2. Borderless Transactions
With USDC, consumers can choose to hold a dollar-denominated stablecoin and carry out cross-border transactions with only a mobile phone or internet connection. In a world where ‘Digital Transformation’ is continuing to drive innovations, near instantaneous and cost effective transactions are possible with the likes of a digital currency like USDC.
At Circle, relationships with innovative brands like MoneyGram and Bitso have made global payments and remittances a much easier experience for individuals and families in markets like Latin America, Africa (South Africa and Nigeria) and in Asia (India and the Philippines).
By leveraging Circle’s infrastructure and suite of APIs, additional communities around the world can use exchanges and wallets to connect their currencies and use USDC to experience the borderless and efficient payment transactions.
Launched in 2018, USDC’s growth has been remarkable, and it’s still in the early stages like all innovations in the broader crypto and blockchain industry.
As the global economy continues to gain interest in the world of digital assets, the demand for digital currencies like USDC will likely continue to grow exponentially. Reaching $50 billion is certainly an impressive feat, and with the need for improved and borderless payment solutions combined with new technology, we can expect USDC and the broader crypto-economy to keep rising.
1 "Fed Preview: How Rate Hikes Could Stimulate Demand for Stablecoins", 02/01/2022, Coindesk
3 "There could be 1 billion global crypto users by the end of 2022, and more than half will own Bitcoin", 02/01/2022, Cryptoslate
* Offering subject to business approval, geographical availability, and regulatory authorization, and there is no guarantee that the product will become available in a specific timeframe or to a specific customer or geography. Circle Yield product offered through Circle International Bermuda Limited (“Circle Bermuda”). Circle Bermuda has entered into lending arrangements with one or more institutional borrowers, including Genesis Global Capital, LLC**. These borrowers pledge and transfer Bitcoin into custody with a third party custodian as collateral for their USDC borrowings and Circle Yield investors benefit from a security interest in Circle Bermuda’s security interest in the pledged Bitcoin. Not currently available in the following U.S. states: Alaska, New York and Hawaii. Rates are purely indicative and are subject to change pending availability, approval and market conditions.
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