The hawkish stance of the Federal Reserve (Fed) caused the second largest stablecoin USDC to face problems and also pushed the price of other cryptocurrencies to fall.
According to Geralt Davidson, the supply of USDC is continuously decreasing due to many whales selling their USD Coins in addition to Tornado Cash's decision which is also the cause of the drop.
The US Treasury's Office of Foreign Assets Control has blocked Tornado Cash from engaging in money laundering activities. And this has made Circle, the parent company of USDC freeze its token on Tornado Cash.
It is understood that some experts believe that USDC will take the position of USDT as the top stablecoin by October 2022 because the trading volume of USDC on the exchange is very close to the volume of USDT in February 2022.
However, USDC is currently unable to compete with USDT following its market cap of $49.7 billion compared to USDT's $68 billion.
For context, USD Coin took a big hit right after Binance and WazirX delisted USDC from their platforms and stopped deposits.
In fact, the Fed's continued hawkish steps on its monetary policy led to a decline in the level of investor confidence in the USDC.
USDC's compliance with Tornado Cash also causes investors to feel that USDC will support Central Bank Digital Currencies (CBDC) because there is no other method for the FDIC, Federal reserve and OCC to provide competitive advantage to USD Coin without CBDC support.
