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.
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But in the midst of this contraction, other signs point to growing acceptance of USDC, the report claimed. Over $197 billion in USDC was minted or burned over the course of the year, allowing the coin to act “as the premier bridge between the digital asset economy and traditional finance.” In addition, the number of wallets with over $10 worth of USDC in them grew to over 2.7 million, a 59% increase over 2022.
2023 was a tumultuous year for USDC. In March, it briefly lost its peg during a brief but tumultuous banking crisis in the United States. However, its peg was quickly regained after the Federal Reserve moved to reimburse depositors of multiple failed
In the first two weeks of 2024, Circle filed for an initial public offering in an attempt to raise funds for further development of the USDC ecosystem and partnered with Yellow Card to expand USDC usage in Africa.