According to a new report from CryptoQuant, USDC liquidity is at its highest level since February 2023. The report noted that Circle typically mints this many tokens in bearish periods.
USDC’s market cap has also increased by over $9 billion in the past month.
Circle’s USDC Liquidity Keeps Growing
CryptoQuant, a respected blockchain analysis firm, released a brief report today on USDC liquidity. Apparently, Circle minted enough USDC stablecoins to reach its highest level in nearly two years.
The report also claimed that a long-running partnership with a crypto market maker possibly contributed to this minting event:
“It is speculated that this is related to a strategic partnership with Cumberland, a market maker well known in the ETF space. It is unclear whether this liquidity will be deployed immediately or held in reserve. Looking at past [BTC] price patterns, USDC liquidity has typically been injected during periods of price consolidation or decline,” it claimed.
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 usually spikes in bearish periods seems odd compared to Circle’s performance.
The firm recently made a major political contribution, and its long-running plan to challenge Tether’s EU market dominance is paying off. In response to Circle’s EU play, Tether also began minting huge amounts of its own stablecoin.
However, this liquidity injection doesn’t quite seem to match USDC’s scenario in a few ways. Instead, the price of Bitcoin might be a better reference point, as it spiked recently.
At the moment, it’s difficult to anticipate what exactly Circle plans to do with this USDC liquidity. The firm’s plan to challenge Tether in Europe has been going well, and it acquired Hashnote Labs yesterday. It also partnered with Aptos to tap into the US TradFi market.
Yet, the firm also carried out substantial layoffs last month. So, Circle’s current financial state is still questionable. The stablecoin issuer is likely reallocating its assets in different avenues to ensure sustainable financial growth under the new regulatory environment – in both the EU and US.
For now, this minting event is one of the clearest windows into Circle’s overall health. Regardless of what it intends to do, this USDC liquidity will give it a broader range of options for the future.
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