- Circle, which is planning to IPO, has been a winner from the surge in Bitcoin and other cryptocurrencies.
- Its stablecoin, USDC, has seen its circulating supply swell 14% from a slump last month.
- While USDC still languishes behind Tether’s USDT, it has outpaced its growth since the beginning of December.
As Circle prepares to go public, its stablecoin, USDC, is experiencing a resurgence.
Coinbase institutional research expects the recovery to continue through the remainder of this year.
The wider stablecoin market has started to “pick up sharply” since the fourth quarter of 2023, Coinbase institutional research said in a report on Monday.
The reason? A boost “in overall crypto demand,” read the report.
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As investors flocked to crypto markets in anticipation of spot Bitcoin exchange-traded funds being approved in the US, stablecoin demand also rebounded.
Soaring Bitcoin prices have helped lift other cryptocurrencies in the ecosystem.
Circle’s USDC has seen its circulating supply jump over 14.2% since the beginning of January.
Comeback
USDC’s circulating supply is now over $27.2 billion, up from $23.8 billion on January 1, according to DefiLlama data.
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The stablecoin hit a peak of $56 billion in June 2022.
The recovery reflects improved liquidity – or how quickly an asset can be converted into cash – and usage outside of the USDC outside of the US.
USDC’s availability on global exchanges has improved over the past few months, aiding this growth.
Circle’s stablecoin has typically been used in the US and Western Europe, while Tether’s USDT is mostly traded in Asia, Africa, and Latin America.
“Indeed, USDT dominates most other regions due to its early adoption on many international exchanges, which has made it more ubiquitous in offshore crypto trading,” Coinbase said.
Coinbase and Circle jointly launched USDC in 2018, rolling out the dollar-pegged token to a wide variety of networks, including Polygon, Solana, and Ethereum.
New markets
Trading volumes on USDC trading pairs are expanding on centralised exchanges, Coinbase said, “although they still pale in comparison to USDT-settled trading in spot and perps overall.”
While USDC still languishes behind Tether’s USDT, it has outpaced its growth since the beginning of December.
USDT is the market’s third-largest cryptocurrency by circulating value, commanding $98 billion, more than triple USDC.
The total share of spot and derivative trading volumes settled in USDC on centralised exchanges has “increased sharply from 0.8% at the start of 2023 to 3.9% as of February 15, 2024,” the report said.
USDC’s share of the perpetual futures, or perps, market has also increased in recent months.
Perps are a type of derivative contract predominantly available in crypto. These types of contracts have no settlement date, meaning that they trade in perpetuity and offer investors significantly more leverage to speculate on price moves.
Coinbase launched a market maker program for USDC in December, to support its growth within the crypto ecosystem.
The program is designed to “improve order book health” on a range of USDC products including spot and perps, the crypto exchange’s report said.
“Initial results suggest that USDC’s share of the perps market has more than tripled between October 1, 2023 and January 31, 2024,” Coinbase said.
USDC is still just 2.6% of global perps futures volumes.
“This is still far below USDT’s dominant 84.4% share of perp volumes,” Coinbase added.
