Despite a challenging 2023 with a substantial decline in circulating supply, a Circle report claims USDC emerges resilient, experiencing a surge in real-world applications and a decrease in speculative trading.
A Resilient Year for USDC Amidst Market Shifts
Circle, the issuer of the USD Coin (USDC), released its “State of the USDC Economy,” covering current key trends and shifting dynamics in USDC and the “new internet financial system.”
2023 was a challenging year for USDC. The stablecoin, which is pegged to the U.S. dollar and backed by liquid cash and cash-equivalent assets, witnessed a decrease in its circulating supply from $45 billion to $25 billion – a 44% decline. This reduction was largely attributed to a shift of assets from the crypto ecosystem to traditional markets, spurred by opportunities brought on by rising interest rates, regulatory pressures, industry bankruptcies, and fraud incidents.
However, in a counterbalancing act, the number of wallets holding at least $10 of USDC soared by 59%, totaling over 2.7 million. This growth occurred amidst a broader contraction in the crypto sector, a move the report considers a signal of confidence in USDC. The stablecoin was an important bridge between the crypto asset economy and traditional finance, with over $197 billion of USDC issued or burned throughout the year.
The Asia-Pacific region, in particular, has witnessed a surge in USDC usage for remittances, with $130 billion flowing into the region in 2022. Circle’s efforts in this region included a partnership with Coins.ph, a Philippines-based exchange, targeting the $36 billion remittance market. The report also states that USDC is playing an important role in addressing the $510 billion trade finance gap in emerging markets.
The report highlights a significant increase in the use of USDC for practical purposes, like remittances and trade finance. Concurrently, it notes a substantial decrease in USDC’s role in speculative trading, which has declined by 90% over the past five years.
What is your stablecoin of preference? Share your thoughts and opinions about this subject in the comments section below.
#News, #Circle, #Crypto, #Cryptocurrency, #Stablecoin, #USDC