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USD Coin price prediction: Will USDC beat leader Tether?

By Mensholong Lepcha and Raphael Sanis

Edited by Alexandra Pankratyeva


Updated

USD Coin on a dark background
Can USDC overtake leading stablecoin Tether? – Photo: Gorev Evgenii / Shutterstock.com

It has been a turbulent period for USD Coin (USDC), the world’s second-largest stablecoin by market capitalisation. While USDC was recently listed by the brokerage Robinhood, the largest cryptocurrency exchange, Binance, has announced plans to reduce its USDC functionality.

This comes after USDC emerged as the ultimate winner after the collapse of Terra’s algorithmic stablecoin TerraUSD (UST), as investors and traders flocked to other stablecoins.

So, what is USD Coin (USDC)? Is the USD Coin value expected to be stable in the future? In this article, you will find all the information you need to know about USDC and its future projections.

What is USD Coin? 

The USD Coin (USDC) stablecoin launched in September 2018. It is pegged to the US dollar on a 1:1 basis. The coin is offered by the Centre Consortium, an organisation founded by the Coinbase crypto exchange (COIN) and fintech company Circle.

Stablecoins such as USDC are integral to the cryptocurrency ecosystem, as they bridge the traditional finance and digital asset markets. Fiat currencies can be converted into USDC on crypto exchanges for use in crypto trading, lending and borrowing, and to gain access to decentralised applications (dApps). 

Individuals can use USDC for payments and international remittances. The stablecoin also gives US dollar exposure to holders, and acts as a store of value in volatile cryptocurrency markets. 

USDC provides full transparency and publishes attested reports regarding its reserve balances. Accounting firm Grant Thornton LLP is responsible for attesting and reviewing USDC reserves on a monthly basis.

According to its website, USDC is a “fully regulated dollar digital stablecoin”. BlackRock and Bank of New York Mellon are among the financial institutions that manage and act as custodians of USDC reserves.

USDC is built on top of an open-source fiat stablecoin framework developed and managed by Centre. The stablecoin is natively supported across multiple blockchain networks, including Ethereum (ETH), Solana (SOL) and Algorand (ALGO).

USD coin emerges stronger after UST collapse

Stablecoins came under the spotlight in the first half of May 2022 when the Terra-based algorithmic stablecoin UST collapsed after seeing capital flight from its ecosystem.

UST, which was for a time the third-largest stablecoin by market capitalisation, started seeing its value trade below its dollar peg on 7 May. Luna Foundation Guard, an entity created to protect UST’s peg, failed to protect UST from falling despite deploying its 80,000 Bitcoin war chest – then worth about $2.7bn. 

Shaken by the dramatic depegging of UST, investors began exiting their Tether holdings, fearing a similar event. 

On 12 May, Tether fell to a low of $0.941. The stablecoin slipped again from its peg on 2 June to hit a low of $0.9949.

“These controversies are likely what is driving stablecoin investors away from USDT, as the event of UST has refreshed the market’s memory of Tether’s lack of transparency with respect to its reserve,” said Anders Nysteen, an analyst at Dutch bank Saxo, in a note dated 12 May.

Following UST’s collapse, many investors turned to USD Coin for its presumed security and reserve backing. USDC added nearly $5.5bn to its market cap in the month of June, while USDT lost about $10.7bn in value in the same period.

“The second-largest stablecoin USDC is, however, backed 100% by reserves in cash and cash equivalents such as short-term highly liquid investments. This is fundamentally different from the collateral in UST, and USDC is thus seen as a much more stable peg to the US dollar,” said Nysteen.

USD coin (USDC) price analysis

“It is expected that in the future USDC will potentially succeed USDT as the largest stablecoin protocol by market capitalisation.”
by Huobi Ventures

Historical chart data from CoinMarketCap showed that USDC has largely maintained a stable peg since October 2020. However, the stablecoin has fallen off its peg a number of times. It fell to an all-time low of $0.9292 on 13 March 2020.

It then saw a spike on 16 November 2021 to its all-time high of $2.35, far above its $1 peg, according to CoinMarketCap. 

However, USD Coin has progressively become more stable over time. 

BCH/USD

376.70 Price
-2.710% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

DOGE/USD

0.12 Price
-2.030% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

BTC/USD

64,486.25 Price
-0.240% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

XRP/USD

0.62 Price
+5.810% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

Data from The Block showed that USDC has grown its total stablecoin supply share from about 8% at the start of 2020 to 30% by mid-September 2022. USDT’s total stablecoin supply share stood at about 47% as of 21 September.

USDC is the fourth-largest cryptocurrency by market capitalisation after Bitcoin (BTC), Ether (ETH) and Tether (USDT), as of 21 September.

Since the beginning of 2021, USDC’s market cap has increased more than tenfold, from about $4bn in January 2021 to $50bn as of 21 September 2022.

Crypto-focused investment firm Huobi Ventures said in a report that a “more compliant” USDC is growing strongly and is favoured by institutions.

“Stablecoins have enabled more assets to be injected into DeFi, accelerating DeFi’s growth, while stablecoin interaction is an integral part of DeFi’s business, and USDC plays an extraordinary role in this – meeting regulatory and institutional needs while freely interacting with on-chain assets in the DeFi protocol. It is expected that in the future USDC will potentially succeed USDT as the largest stablecoin protocol by market capitalisation,” said Huobi Ventures. 

USD coin all-time performance

Source: CoinMarketCap

Recent news: Stablecoin tension and new listings

USD Coin has recently received some bullish news as it was listed on the Robinhood exchange on 20 September 2022. While Robinhood has support for 17 different cryptocurrencies, including ETH and BTC, USDC was the brokerage’s first stablecoin on the platform.

Jason Warnick, Robinhood’s chief financial officer, said in an earnings call: “Our vision with crypto is to be the most trusted platform for customers to invest in crypto as well as the most trusted on-ramp to the decentralised web.”

However, USDC is still facing pressure from its rivals. Binance, the largest cryptocurrency exchange, announced earlier this month it was auto-converting users’ funds from USDC and other stablecoins into Binance USD (BUSD).

It was also limiting the amount of USDC trading that is available on the exchange, with numerous pairs set to be delisted.

USD coin price prediction: Target prices for 2022-2025, 2030

As of 21 September 2022, algorithm-based forecasting site WalletInvestor expected the USDC/USD price to remain largely pegged to the US dollar over the next five years. 

WalletInvestor’s USDC price prediction saw the stablecoin maintaining an average price of $1 in 2022. Its USD coin price prediction for 2025 saw the coin maintaining an average price between $1 and $1.007.

DigitalCoinPrice’s USD Coin price prediction for 2022 saw the price reaching $1.01 in October  and holding at that level throughout the coming years. Its USD coin price prediction for 2030 estimated the same level of $1.01.

On the other hand, Gov Capital’s USD Coin price prediction was bullish and anticipated it to depeg. The site suggested USDC would hit $1.66 in a year and $5.59 in five years’ time.

When considering any USD Coin crypto price predictions, it’s important to keep in mind that cryptocurrency markets are very volatile. Analysts and algorithm-based forecasters can and do get their expectations wrong.

If you are interested in trading cryptocurrency tokens like USD Coin (USDC), we recommend that you always do your own research. Look at the latest market trends, news, technical and fundamental analysis, and expert opinion before making any trading decision. Keep in mind that past performance is no guarantee of future returns, and never trade money that you cannot afford to lose.

FAQs

Is USD Coin a good investment?

USD Coin (USDC) is a stablecoin designed to maintain a 1:1 peg to the value of the US dollar. According to Huobi Ventures, it could succeed Tether (USDT) as the largest stablecoin by market capitalisation. But this is not guaranteed, especially as it is feeling pressure from the Binance USD stablecoin. 

In volatile cryptocurrency markets, it is important to do your own research on a coin or token to determine if it is a good fit for your investment portfolio. Whether USDC is a suitable investment for you depends on your risk tolerance and how much you intend to invest, among other factors.

Keep in mind that past performance is no guarantee of future returns, and never invest money that you cannot afford to lose.

Will USD Coin go up or down?

Stablecoins are designed to be pegged to fiat currencies like the US dollar. However, stablecoins losing their value is not unheard of. The algorithmic stablecoin TerraClassicUSD (USTC) – a new version of UST – fell off its dollar peg to trade at $0.015, as of 7 June 2022. 

In volatile cryptocurrency markets, it is important to do your own research on a coin or token to determine if it is a good fit for your investment portfolio. Whether USD coin is a suitable investment for you depends on your risk tolerance and how much you intend to invest, among other factors.

Keep in mind that past performance is no guarantee of future returns, and never invest money that you cannot afford to lose.

Should I invest in USDC?

Stablecoins are designed to be pegged to fiat currencies. As of 21 September 2022, algorithm-based forecasting tools WalletInvestor and DigitalCoinPrice gave bullish projections for the future of USDC, expecting it to keep its dollar peg for the next five years and beyond. However, Gov Capital suggested it would depeg and soar above $5 in five years’ time. 

Whether you should invest in USDC is a question that you will have to answer for yourself. Before you do so, however, you will need to conduct your own research. Never invest more money than you can afford to lose, because prices can go down as well as up. 

Markets in this article

ALGO/USD
Algorand / USD
0.1611 USD
-0.0015 -0.940%
BTC/USD
Bitcoin / USD
64486.25 USD
-155.45 -0.240%
COIN
Coinbase Global Inc (Extended Hours)
246.72 USD
-3.32 -1.330%
ETH/USD
Ethereum / USD
3416.39 USD
-20.89 -0.610%
SOL/USD
Solana / USD
157.8294 USD
-2.7079 -1.690%

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