Tether Asserts Stablecoin Dominance Over Circle's USDC Amid Major Crypto Hacks

In brief

• Growth in USDT’s market cap has outpaced USDC’s since Drift Protocol was exploited for $285 million this month.
• If USDC holders begin off-ramping the stablecoin or move it to exchanges, Compass Point analysts foresee lower profits for both Circle and Coinbase.
• Nansen analyst Jake Kennis posited to Decrypt that Tether’s stablecoin likely offers superior liquidity during DeFi crises.

Tether’s dominance over Circle has been rising since Solana-based Drift Protocol was exploited for $285 million this month, with decentralized finance users appearing to propel USDT’s market cap to an all-time high on Tuesday following another major hack.

Since attackers linked to North Korea pulled off one of DeFi’s largest hacks this year, USDT’s market cap has grown 2.1% to nearly $188 billion, according to CoinGecko. Meanwhile, USDC's total value has increased at a slower pace, rising 1.4% to $78.25 billion.

In a Tuesday note, analysts at investment bank Compass Point wagered that DeFi outflows have the potential to pressure USDC’s on-chain circulation, a dynamic that would reduce gains derived from the stablecoin’s backing, namely U.S. Treasuries, for Coinbase and Circle.

188B USDT (ATH)

— Paolo Ardoino 🤖 (@paoloardoino) April 21, 2026

“DeFi outflows may result in users offramping USDC or holding USDC on exchanges with yield sharing arrangements,” they wrote. “Either outcome will put pressure on CRCL and COIN's gross profit, via lower interest revenue or lower margins.”

The analysts’ assessment is partly based on the fact that investors “quickly withdrew” $1.5 billion in stablecoins from lending protocol Aave after attackers swiped funds related to restaking protocol Kelp DAO, and used them to borrow funds from Aave’s platform.

Although users have snapped up both stablecoins since Drift’s protocol was plundered, Tether’s product has likely benefited from superior crisis liquidity as fears have intensified, Jake Kennis, a senior research analyst at blockchain analytics firm Nansen, told Decrypt.

“This gap may reflect that USDT’s deeper liquidity across centralized venues provides a more immediate ‘flight to safety’ path during DeFi stress events, particularly for users seeking rapid exits from on-chain positions,” he said.

“While both stablecoins remain well-collateralized, USDT’s broader exchange integration and larger existing market share create network effects that tend to compound during periods of elevated protocol risk,” he added.

Drift’s exploit has also intensified scrutiny on Circle’s procedures. After attackers used Circle’s infrastructure to move millions of dollars in crypto from one network to another, the company was hit with a class action lawsuit last week for its alleged failure to freeze the funds.

Circle has defended its conduct, with CEO Jeremy Allaire arguing that unilaterally deciding to freeze users’ funds opens a “significant moral quandary.” At the same time, Drift has signaled that it will stop supporting the stablecoin after receiving recovery commitments from Tether.

Compass Point analysts have assigned Circle shares a price target of $77 alongside a “Sell” rating. The stablecoin issuer’s shares changed hands under $98 on Tuesday, an 8% decrease over the past day, according to Yahoo Finance.

Decrypt has reached out to Circle and Tether for comment.

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