Circle redeems roughly $11.7 billion in USDC as supply slips to $70 billion

Circle's USDC stablecoin shrank again in the week ending October 29, with the company cutting circulating supply by $800 million to reach $70 billion. This marks the second consecutive weekly drop, following a reduction of approximately $500 million in the previous week.

During this period, Circle issued about $10.9 billion in new USDC while redeeming roughly $11.7 billion, resulting in a net outflow. The two-week decline totals about $1.3 billion, representing a modest but notable reduction from the $70 billion base.

Reserve Composition

As of October 29, Circle's reserves stood at approximately $71.4 billion, maintaining full 1:1 backing for the circulating supply. The reserves consist of $32.9 billion in overnight reverse Treasury repurchase agreements, $27.5 billion in US Treasuries maturing in less than three months, and $10.4 billion in deposits at major financial institutions.

Revenue Impact

The shrinking supply affects Circle's business model, as the company's revenue depends heavily on interest earned from reserves. Fewer tokens in circulation mean less interest income, which has led to analyst downgrades of Circle's share price targets amid concerns about stablecoin competition offering higher yields.

Market Trends

Research indicates changing behavior among stablecoin holders, with rising caution and possible influence from AI-driven investment decisions affecting where market participants park their funds. The next weekly reports will be closely monitored for three key metrics: net supply change, gross issuance versus redemption ratios, and reserve composition shifts.