Amidst a US banking crisis that has contributed to the cryptocurrency space's decline for its 12th consecutive month, the total market capitalization of stablecoins has dropped by 1.35% to $133 billion, the lowest it has been in 18 months.
The market capitalization of stablecoins decreased after many stablecoins were depegged after Silicon Valley Bank's bankruptcy, a cryptocurrency-friendly bank that housed $3.3 billion of USDC's reserves. This is according to CryptoCompare's most recent Stablecoins & CBDCs report.
According to the article, USDC depegged on March 10 as it became known that some of its reserves were in it, reaching $0.877 on March 11. DAI, MIM, and FRAX, all stablecoins that use USDC as collateral, all decreased in value as well.
As a result, stablecoin market share ended the month at its lowest level since April 2022, dropping from 12.6% to 11.4%.
The fall "highlights the surge in the values of crypto assets despite the recent depeg of USDC and other stablecoins," according to CryptoCompare. Notwithstanding these drops, on March 14 after USDC and others regained their peg, stablecoin trading volume hit $51.9 billion.
They were reinstated after the Federal Deposit Insurance Corporation (FDIC) intervened and said that it would reimburse each depositor at SVB, ensuring the preservation of the $3.3 billion in USDC reserves.
This was the greatest day volume reported since FTX's collapse on November 10 according to CryptoCompare's analysis.
The research also points out that in March, TUSD's market capitalization saw a notable increase of 82.6%, hitting $2.04 billion.
This surge is the result of Binance's decision to restart trading TUSD pairings on its platform and convert $1 billion from its "SAFU Fund" in BUSD to TUSD and USDT. TUSD stands out in addition as the only BTC and ETH trading pair on the exchange with no fees.
Meanwhile, USDT continued to hold the lead among stablecoins since BUSD ceased issuing new tokens and USDC was in doubt following the failure of its partner bank. The market domination of USDT is currently 57.5%, which is the highest level since June 20, 2021. According to the data, USDT's market worth has grown by $5.76 billion since USDC's depegging.