So. Okt 1st, 2023

• USDC experienced a 2% dip in circulating supply over the July 4th weekend.
• The total supply of USDC has decreased by 38% since January 1st.
• In response to potential liquidity concerns, Circle shifted towards short-term maturity bonds to back USDC.

USDC Experiences 2% Dip in Supply Over July 4 Weekend

USDC has experienced a dip in circulating supply over the July 4th weekend, with its total supply decreasing by 38% since January 1st. This decline is not an isolated event and casts doubt on the resilience of stablecoins.

Circle Shifts Towards Short-Term Bonds for USDC

In response to potential liquidity concerns surrounding US Treasury bonds, Circle, the issuer of USDC, decided to shift towards short-term maturity bonds. A recent attestation report conducted by Deloitte reveals that there are $11 billion of US treasury securities within Circle’s reserve fund for USDC, as well as $13.1 billion in repurchase agreements and $2 billion in cash reserves held by regulated financial institutions.

CoinGecko Data Analysis

According to data from CoinGecko , on June 30th, the circulating supply of USDC stood at $27.9 billion but within less than 48 hours dropped 2% to $27.3 billion. This highlights the overall downward trend in circulation since the beginning of 2021.

USDC Widely Used Stablecoin

USDC is one of the most widely used stablecoins within the decentralized finance ecosystem, trailing behind Tether’s USDT and employed natively on 63 different chains with most of its supply circulating through Ethereum’s network using an over-collateralization approach which maintains more assets than necessary to uphold its value equivalent to the dollar.

Fluctuations Not Uncommon

Although fluctuations like these aren’t uncommon due to cryptocurrency’s volatility, it does cast doubt on certain stablecoins‘ long term stability – leaving investors questioning their reliability going forward when considering their use for transactions or investments..

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