1. Arbitrage
Although both USDT and USDC are pegged to the dollar, their price can fluctuate slightly due to differences in liquidity, demand, and supply on different exchanges. Traders use these small discrepancies for arbitrage, buying cheaper on one platform and selling for more on another.
2. Liquidity and Conversion
Some exchanges or DeFi protocols may support only one of the stablecoins. Trading allows users to convert USDT to USDC and vice versa, providing access to the desired asset without the need to withdraw funds to fiat.
3. Risk Management
USDT and USDC have different issuers (Tether and Circle), and each has its own risks. For example, trust in Tether's reserves is sometimes questioned, while USDC is more strictly regulated. Traders may switch between them depending on market conditions and news.
4. Margin Trading and DeFi
Some platforms allow the use of USDT or USDC as collateral for margin trading or lending. If one of the stablecoins becomes more in demand, its price may deviate slightly, creating trading opportunities.
5. Difference in Fees and Transaction Speed
USDT and USDC can operate on different blockchains (Ethereum, Tron, Solana, etc.), and transfer fees may vary. Sometimes traders convert one to another to take advantage of cheaper or faster transactions.
Although the price difference is usually minimal, these factors make trading in the USDT/USDC pair useful for arbitrage, liquidity, and risk management.
