Despite a steep drop in USDC's circulating supply, its user base may have increased over the course of the year.
The number of wallets holding at least $10 worth of USD Coin (USDC) grew by 59% in 2023, according to a Jan. 15 report from its issuer, Circle. This growth came despite USDC losing $20 billion of its circulating supply, implying that the coin may gained users even as its market capitalization depreciated.
The report, titled “State of the USDC Economy,” presented a broad overview of the current usage of USDC. In the report, Circle said the coin’s circulating supply fell from $45 billion to $25 billion in the first 11 months of 2023, a decline of approximately 44%.
Circle attributed the decline to “[r]ising interest rates, regulatory crackdowns, bankruptcies, and outright fraud” in crypto, which caused users to pull their money out of the ecosystem and into traditional markets. They cited the “opportunity costs of holding USDC” as an especially important force behind this decline, as rising interest rates have attracted investors to more traditional markets.
