USDC’s circulating supply has fallen to about $73 billion from nearly $80 billion in March, trimming its share of the roughly $312 billion stablecoin market as competition from newly regulated issuers intensifies.
Circle shares fell more than 17% the day Open USD was announced, however CoinShares said the decline was likely compounded by technical selling associated with the Russell index’s reconstitution.
Still, the report argued that the market may be overreacting. Open USD is yet to launch, key details are still unsettled, and Circle maintains a significant advantage through USDC’s deep liquidity and years of integrations across exchanges, DeFi and payments.
Open USD is unlikely to pose a major threat to Tether, whose dominance of emerging markets and offshore dollar liquidity gives USDT, by far the largest stablecoin, another competitive moat, the report added.
For now, investors should watch whether Circle changes its distribution strategy and whether Open USD can convert its high-profile backing into adoption, CoinShares said. Until then, the project remains a credible, but unproven, challenge for the USDC.
CoinShares is not alone in noting the challenge posed by Open USD. Japanese investment bank Mizuho downgraded Circle to underperform from neutral and cut its price target to $50 from $85 in a note to clients on Tuesday, arguing that the new rival’s business model threatens the stablecoin issuer’s long-term financials.
