COIN price jumps as Coinbase announces stake in USDC issuer Circle
- Coinbase announced an equity stake in Circle as an investment in the growth of USDC.
- The exchange said that USDC would also be launching on six new blockchains, although the chains are yet to be named.
- This partnership could serve as a revival for USDC, which lost a huge chunk of the market share following the banking crisis in the US, bringing its circulation down to $26 billion.
Coinbase has been in the headlines for the past few months owing to the changing market and its tiff with the Securities and Exchange Commission (SEC).
Earlier in the year, the crypto exchange was of the opinion that regulatory hurdles in the United States might drive the company away from the country. However, per the latest updates, the company is doubling down on its investment in a US-based company.
Coinbase joins hands with USDC issuer Circle
The second biggest cryptocurrency exchange - Coinbase, announced that it would be acquiring a stake in the issuer of the second biggest stablecoin in the world, USD Coin (USDC) - Circle. This would mark a crucial development for both firms as the recent market conditions impacted the crypto market severely.
In the announcement, Coinbase stated,
“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.”
They added that going forward, USDC’s presence will be expanded across networks adding support for six new blockchains by launching the stablecoin on them. Following the news of the exchange gaining an equity stake in the stablecoin issuer, Coinbase’s stock COIN noted a jump in its price.
At the closing bell, COIN could be seen trading at $75.28, up by nearly 3% in the past day. This was the first instance of consecutive green candles since mid-July, reviving the hopes of a recovery following the 31% crash in the past few weeks.
COIN 1-day chart
Furthermore, the development is also expected to play in favor of USDC, which has been losing ground since March this year. The stablecoin was gravely impacted by the banking crisis, losing over $17 billion in market capitalization. This resulted in an increase in the demand for Tether (USDT), pushing its circulation to $82.8 billion.
USDC-USDT circulating supply
With the backing of the second biggest crypto exchange and the launch on six new blockchains, Circle-issued USDC might be able to regain some of the lost dominance in the stablecoin market.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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Author
Aaryamann Shrivastava
FXStreet
Aaryamann Shrivastava is a Cryptocurrency journalist and market analyst with over 1,000 articles under his name. Graduated with an Honours in Journalism, he has been part of the crypto industry for more than a year now.
