• USDC experienced a 2% dip in its circulating supply over the July 4th weekend.
• The total supply of USDC has decreased by 38% since January 1st.
• In March, Circle shifted towards short-term maturity bonds to stabilize USDC’s value.
USDC Experiences Dip in Supply Over July 4 Weekend
USDC has experienced a dip in circulating supply over the July 4th weekend, dropping 2% from $27.9 billion on June 30 to $27.3 billion within 48 hours. This is part of an overall downward trend that has been ongoing since the start of 2021, with the total supply of USDC decreasing by 38%.
Circle’s Response to Challenges
In response to potential liquidity concerns surrounding US Treasury bonds, Circle decided to shift their strategy and employ an over-collateralization approach for USDC, utilizing short-term maturity bonds as well as other assets like US Treasury repurchase agreements and cash reserves from regulated financial institutions.
USDC’s Popularity in DeFi Ecosystem
USDC is one of the most widely used stablecoins within the decentralized finance ecosystem, trailing behind Tether’s USDT and natively deployed on 63 different blockchains. As such, it serves as a reliable bridge between traditional fiat currencies and cryptocurrencies.
Deloitte Attestation Report
A Deloitte attestation report conducted in May 2021 revealed that US treasury securities constitute $11 billion of the total collateral backing held in Circle’s reserve fund for USDC. Additionally, there are approximately $13.1 billion in US Treasury repurchase agreements and slightly over $2 billion in cash reserves within its fund. Moreover, regulated financial institutions hold an additional $2 billion worth of assets for stability purposes.
Overall, while fluctuations are common among cryptocurrencies such as stablecoins due to their volatile nature, it is important for issuers like Circle to be proactive when responding to challenges so as to ensure reliability and security moving forward.