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Circulating USDC Supply Drops Below $40 Billion Again

Even though stablecoins are crucial to cryptocurrency, their momentum continues to decelerate. USD Coin, or USDC, saw its circulating supply dip below $40 billion for the first time since late 2022. As a result, investors and traders have cooled off on this asset a bit. 

Seeing any notable changes in a stablecoin’s circulating supply isn’t abnormal. Centralized pegged currencies, like USDT and USDC, are issued by companies holding equal reserves in currency, bonds, or other assets. If those reserves go down, so too must the supply of their respective stablecoin.

The years 2020 and 2021 have seen an explosion in stablecoin popularity. USDT remains the biggest dog in the yard, although USD Coin put up a valiant fight. Its circulating supply rose from under $4 billion on January 1, 2021, to $47.174 billion by February 2, 2022. It is a remarkable growth, confirming there is room for competing stable currencies. 

Unfortunately for the project, that was the peak of its momentum. Its supply and overall demand for USDC have gone downhill ever since. Moreover, there doesn’t appear to be any change on the horizon. Traders and investors seek less exposure to stablecoins since mid-2022.

That may be due to the collapse of UST, the stablecoin of the now-defunct Terra ecosystem. It was an algorithmic stablecoin rather than one backed by tangible reserves. However, it depegged violently and ultimately became worthless. That development reduced the appeal of stablecoins by a significant margin. Even so, there is a stark difference between algorithmic and centralized pegged currencies.

One thing is undeniable: the USDC circulating supply keeps decreasing. It is unclear why this happened, although Binance’s recent decision may be an influence. Although users can still deposit and withdraw USDC, their account balance will display “BUSD”, the native stablecoin of the exchange. As such, many people forget there are options besides USDT and BUSD.

Moreover, there are no USDC trading pairs on the exchange anymore. Binance consolidates all “minor stablecoins” into BUSD for various reasons. However, newcomers may never figure out its purpose when the leading exchange doesn’t mention USD Coin anywhere. Brand recognition is crucial in cryptocurrency circles, and USD Coin lacks that aspect. 

It is worth noting roughly one-third of all USDC is held in smart contracts. Individual and exchange accounts keep the remainder. Like with crypto assets like Bitcoin and Ethereum, self-custody is crucial for stablecoins. Never keep money on an exchange unless you regularly trade it back and forth. One should never trust an exchange or third-party centralized service provider.

Contracts-wise, USDC is primarily held by MakerDAO, Polygon’s ERC-20 bridge, and the Arbitrum One Bridge. Individual accounts mainly belong to Binance, Centre, and Crypto.com. 

The post Circulating USDC Supply Drops Below $40 Billion Again appeared first on CryptoMode.

Jerry Rolon

After working for 7 years as a Internet Marketer, Jerry now aims to explore the journalistic side of Internet. With his impeccable knowledge in this domain, he churns out some of the best news articles from the internet niche. With respect to acedamics, Jerry earned a degree in business from California State University.

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