According to a new report from CryptoQuant, USDC liquidity is at its highest level since February 2023. The report notes that Circle typically mints as many tokens during bearish periods..
The market cap of USDC has also increased by over $9 billion over the past month.
Circle USDC Liquidity Continues to Grow
CryptoQuant, a respected blockchain analysis company, today released a brief report on USDC liquidity. Apparently, Circle has issued enough USDC stablecoins to reach its highest level in almost two years.
The report also claims that a long-standing partnership with a crypto market maker may have contributed to this minting event:
“This is believed to be related to a strategic partnership with Cumberland, a well-known market maker in the ETF space. It is unclear whether this liquidity will be deployed immediately or held in reserve. Looking at the past [BTC] Depending on price models, USDC liquidity has typically been injected during periods of price consolidation or decline,” he asserted.
USDC is a popular stablecoin issued by Circle, although its dominance is significantly lower than Tether’s USDT. Still, the report’s assertion that USDC liquidity generally increases during bearish periods seems odd when compared to Circle’s performance.
The company recently made a major political contribution, and its long-term plan to challenge Tether’s dominance in the European market is paying off. In response to Circle’s European play, Tether also began minting huge amounts of its own stablecoin.
However, this liquidity injection doesn’t quite seem to fit the USDC scenario in several respects. Instead, the price of Bitcoin might be a better reference point, as it has been rising recently.
At the moment, it is difficult to anticipate what exactly Circle intends to do with this USDC liquidity. The company’s plan to compete with Tether in Europe is going well and acquired Hashnote Labs yesterday. It has also partnered with Aptos to tap the US TradFi market.
Yet the company also made significant layoffs last month. Thus, Circle’s current financial situation is still questionable. The stablecoin issuer will likely reallocate its assets in different ways to ensure sustainable financial growth in the new regulatory environment – both in the EU and the US.
For now, this strike event is one of the clearest windows into Circle’s overall health. Regardless of what he intends to do, this USDC liquidity will give him a wider range of options going forward.
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