USDC fell by $800 million in one week. Is capital leaving, or just moving somewhere else?
First, the official Circle ledger (for the 7 days through October 29):
About $10.9 billion issued, about $11.7 billion redeemed, for a net decrease of about $800 million. Total circulation is back to $70 billion.
The bull case first:
Reserves are about $71.4 billion, still above the $70 billion in circulation, so the 1:1 backing remains intact: $32.9 billion in overnight reverse repos, $27.5 billion in Treasury bills maturing within 3 months, and $10.4 billion in deposits at systemically important institutions. The composition hasn’t deteriorated.
And the $22.6 billion in flows over the week shows the pipeline is still operating at high speed; this isn’t a one-way run: issuance of $10.9 billion is not zero.
The bear case is just as clear:
This is the second consecutive week of net outflows—the previous week (through October 22) had already seen a decrease of about $500 million, bringing the two-week total to about $1.3 billion.
Redemptions have exceeded issuance for two weeks running. In the current market ($BTC is still grinding in the 76,500–79,400 range, with the Fear & Greed Index at 35), this isn’t an isolated figure, but another sign of capital contracting in a weak market.
My take:
At around 1% of the $70 billion baseline, $800 million looks like a contraction, not an exodus. “Normal redemptions in a weak market” is the more fitting characterization.
The key isn’t USDC itself, but the trend: if net outflows widen to more than $2 billion in a single week next week, or reserve coverage falls below circulation, then the funding picture will have truly worsened. Conversely, if issuance once again exceeds redemptions, this round of contraction is just weekly volatility.
The $BTC levels remain unchanged: treat any rebound as a bounce until it reclaims and holds 79,400; below 76,500, look to 75,000.
Invalidation conditions: if weekly net outflows exceed $2 billion for a third consecutive week, or reserves fall below circulation, either one invalidates this post’s “normal redemptions” assessment.
One last question: Did you convert the stablecoins you held this week into fiat and leave, or move them somewhere else?
First, the official Circle ledger (for the 7 days through October 29):
About $10.9 billion issued, about $11.7 billion redeemed, for a net decrease of about $800 million. Total circulation is back to $70 billion.
The bull case first:
Reserves are about $71.4 billion, still above the $70 billion in circulation, so the 1:1 backing remains intact: $32.9 billion in overnight reverse repos, $27.5 billion in Treasury bills maturing within 3 months, and $10.4 billion in deposits at systemically important institutions. The composition hasn’t deteriorated.
And the $22.6 billion in flows over the week shows the pipeline is still operating at high speed; this isn’t a one-way run: issuance of $10.9 billion is not zero.
The bear case is just as clear:
This is the second consecutive week of net outflows—the previous week (through October 22) had already seen a decrease of about $500 million, bringing the two-week total to about $1.3 billion.
Redemptions have exceeded issuance for two weeks running. In the current market ($BTC is still grinding in the 76,500–79,400 range, with the Fear & Greed Index at 35), this isn’t an isolated figure, but another sign of capital contracting in a weak market.
My take:
At around 1% of the $70 billion baseline, $800 million looks like a contraction, not an exodus. “Normal redemptions in a weak market” is the more fitting characterization.
The key isn’t USDC itself, but the trend: if net outflows widen to more than $2 billion in a single week next week, or reserve coverage falls below circulation, then the funding picture will have truly worsened. Conversely, if issuance once again exceeds redemptions, this round of contraction is just weekly volatility.
The $BTC levels remain unchanged: treat any rebound as a bounce until it reclaims and holds 79,400; below 76,500, look to 75,000.
Invalidation conditions: if weekly net outflows exceed $2 billion for a third consecutive week, or reserves fall below circulation, either one invalidates this post’s “normal redemptions” assessment.
One last question: Did you convert the stablecoins you held this week into fiat and leave, or move them somewhere else?