- USDC has become a preferred trading asset due to its reliability, liquidity, and efficiency.
- USDC offers advantages such as near-instant settlement, low transaction costs, transparency, and programmability.
- USDC stands out among stablecoins as a fully-reserved, rapidly growing digital dollar with broad ecosystem adoption.
Digital dollar stablecoins like USDC have cemented their position in the global crypto capital markets as the go-to trading asset for many cryptocurrency traders. Today, the majority of bitcoin trading volume takes place in stablecoins, not fiat currency, underscoring the recent explosive growth in the supply and circulation of dollar-backed stablecoins.
What are crypto capital markets?
Like traditional capital markets, crypto capital markets allow businesses and organizations to raise funds by issuing digital blockchain-based assets, which later become tradable in the secondary market.
For investors, crypto capital markets provide a universe of investable assets ranging from security tokens representing a claim on equity or debt to more traditional cryptocurrencies like bitcoin (BTC) or ether (ETH).
More and more institutional investors and corporate organizations continue exploring crypto capital markets by adding exposure to BTC to their portfolios or balance sheets.
While BTC often grabs headlines, crypto capital markets rely on stablecoins like USDC more than any other asset for reliable liquidity and near-instant settlement.
Stablecoins: the backbone of crypto capital markets
Stablecoins have become the backbone of crypto capital markets due to a variety of advantages over traditional fiat currency infrastructure:
- Near-instantaneous transaction settlement
- Lower transaction costs than traditional payment rails
- Transactional transparency in real-time
- Reduction in counterparty risk
- Open, inclusive accessibility in many regions and jurisdictions
- “Programmability,” or the means to build modular applications using stablecoin technology
Crypto capital markets operate 24/7, and have significant volatility in asset prices, and so the stability, speed of settlement, and low transaction costs associated with stablecoins make them ideal cash proxies for crypto capital market transactions.
Digital dollar stablecoin use cases for crypto traders
There are three primary use cases for digital dollar stablecoins in the global crypto markets. Stablecoins like USDC can be used as:
- Trading capital
- A counterparty settlement instrument
- A base currency to move in and out of crypto assets
USDC as trading capital
An increasing number of crypto market participants are choosing stablecoins like USDC as their trading capital. Crypto markets move quickly and are prone to high volatility — meaning the opportunity cost of primarily trading with USD held in a bank account where bank transfers can take days to process is high. Instead, many crypto traders prefer to store trading funds in digital dollars like USDC because of its widespread accessibility and near-instant availability. USDC is widely available via Circle’s wide network of distribution partners (including over 100 cryptocurrency exchanges), which makes it easy to quickly deploy capital globally when a trading opportunity arises.
USDC as a counterparty settlement instrument
Stablecoins also function as a counterparty settlement instrument allowing fast and secure settlement with real-time transaction transparency. With bank transfers, you don’t know exactly when your funds will arrive until they show up in your account. This can take hours or even days, as banking hours typically exclude nights, weekends, and holidays. USDC, on the other hand, enables transactions that can settle in minutes or seconds thanks to the 24/7 availability of the blockchain networks that USDC runs on.
USDC as a base currency for trading
Crypto traders often use digital dollar stablecoins as a base currency to trade in and out of more volatile crypto assets like BTC or ETH. Instead of making fiat-to-crypto or crypto-to-fiat trades when entering or exiting positions, traders can use USDC to seamlessly trade crypto-to-crypto with much higher efficiency. USDC trading pairs also offer excellent liquidity for leading digital assets, reducing the need to use fiat currency to access certain assets.
Digital dollar stablecoins have emerged as the backbone of the crypto capital markets, but not all stablecoins are created equal. The rapidly expanding stablecoin ecosystem offers USD-pegged crypto assets with varying degrees of trust, transparency, and adoption. USDC stands out among its peers as the fastest-growing, fully-reserved digital dollar stablecoin thanks to its transparent reserves, high liquidity and availability, and widespread integration in the blockchain ecosystem.
USDC: the go-to stablecoin for crypto traders
USDC is a digital dollar stablecoin that empowers people in over 180 countries to send, spend, save, and trade digital dollars over the internet. USDC is redeemable 1:1 for US dollars and backed by fully reserved assets held in regulated financial institutions.
As a multi-chain stablecoin, USDC is natively issued on more than 15 blockchain networks, such as Arbitrum, Base, Ethereum, Solana, and more.
For professional crypto trading operations, USDC combines all the best aspects of a market-leading stablecoin, plus a suite of plug-and-play APIs that allows quick integration of USDC into trading systems and platforms.
The future of crypto capital markets
Crypto capital markets are rapidly evolving, and participants include corporations, investment funds, hedge funds, prop trading houses, algorithmic trading firms, OTC trading desks, high-net-worth individuals, and traditional banks. The list of market participants grows as crypto capital markets continue to integrate with legacy capital market structures. As the convergence of legacy and decentralized finance (DeFi) unfolds, USDC continues to be highlighted as an important asset in the digital economy.