Official statistics show that from March 17 to March 24, Circle issued a total of USD 500 million USDC, redeemed USD 2.6 billion, and had a USD 2.1 billion fall in circulation. As of March 17, there were 34.6 billion US dollars in total circulation and 34.6 billion US dollars in reserves, which included 5.6 billion US dollars in cash and 29 billion US dollars in short-term US government bonds.
This decrease in circulation could be caused by a variety of factors, such as a change in consumer preferences or market trends. In order to increase demand and improve circulation, it may also be important to look into alternative solutions to this issue, such as increased marketing initiatives or partnerships with other businesses.
Circle's issues started when SVB, where the stablecoin issuer held $3.3 billion of its assets, was shut down. The currency is intended to be backed 1:1 by USDC and the dollar. For approximately 36 hours, USDC was unpegged, dropping as low as 85 cents.
On March 13, Circle transferred the funds to other banking partners, and since then, the currency's value has increased. But Web3 users have kept dumping this stablecoin. Since March 13, investors have redeemed $5.76 billion in USDC on Ethereum, while Circle has issued about $874 million of the stablecoin, based to CryptoCompare statistics.
The recent market increase might have had an impact. During downturns, traders typically keep funds in stablecoins and then exchange it for other cryptocurrencies when prices rise. Yet, the current spike has disproportionately hurt Tether compared to Circle, whose stablecoin market valuation has dropped by 17% to $35.3 billion since the beginning of March.
As per CryptoCompare analyst Jacob Joseph, "Recent worries regarding the closure of banking partners appear to have moved users to USDT and other stablecoins over USDC."
All of the cash held as a reserve for this stablecoin is currently with Bank of New York Mellon, as per to Circle CEO Jeremy Allaire's statement from last week.
