• USDC has experienced a dip in circulating supply over the July 4th weekend.
• Since January 1st, the total supply of USDC has decreased by 38%.
• In response to potential liquidity concerns, Circle shifted towards short-term maturity bonds.
USDC Experiences Dip in Supply Over July 4 Weekend
USDC has experienced a dip in circulating supply over the July 4th weekend. According to data from CoinGecko, on June 30, the circulating supply of USDC stood at $27.9 billion, but within less than 48 hours, it dropped 2% to $27.3 billion. This decline is part of a downward trend that has been ongoing since the beginning of the year and reflects a 38% decrease in total supply since January 1st.
Circle’s Strategic Moves
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 US Treasury securities constitute $11 billion of the total collateral backing held in Circle’s reserve fund for USDC, as well as approximately $13.1 billion in US Treasury repurchase agreements and slightly over $2 billion in cash reserves within the company’s fund. Additionally, regulated financial institutions hold an additional $2 billion in assets.
USDC’s Popularity Within DeFi Ecosystem
USDC is one of the most widely used stablecoins within the decentralized finance ecosystem and is deployed natively on 63 different chains with most of its supply circulating on Ethereum network. It employs an over-collateralization approach which means that it maintains more assets than necessary to uphold its value equivalent to the US dollar.
March Depegging From Dollar
Earlier this year, there was a brief depegging from USD due to multiple crypto bank collapses which resulted into strategic move from Circle for liquidty concerns related with treasury bonds .
While fluctuations are not uncommon in volatile cryptocurrency markets , Circle’s strategic moves have ensured liquidity and resilience for USDC .