USDC regained its peg after Circle quickly moved with new banking partners. USDC showed signs of demand and volume recovery.
Circle had its toughest week yet this year after USD Coin [USDC] lost his dollar peg. It has since recovered, but the stablecoin issuer has just released another update regarding its USDC business.
According to the update, Circle cashed in USD 2.9 billion and minted USD 700 million on March 14. Those efforts were part of the action plan to promote linkage restoration. More importantly, Circle announced that it was recruiting new transaction banking partners. The company’s goal is to facilitate round-the-clock transactions that are not constrained by regular banking hours.
Circle announced that it had redeemed USD 2.9 billion and minted USD 700 million as of March 13. That was less than a previous estimate of $4 billion to $12 billion without the help of US government banks. Circle says it will continue to add new transaction banking… https://t.co/OgxuEPTVVb
— Wu Blockchain (@WuBlockchain) March 15, 2023
Circle further disclosed that it had limited funds held by its transaction banking to support redemption and coin minting. It also revealed that it had a cash position of its reserve with BNY Mellon. So at the time of writing, it had ramps for users looking to move their funds into the crypto segment.
Circle’s move underlined plans to sidestep regulators’ efforts to prevent banks from collaborating with crypto companies. It also came just days after multiple banks collapsed, putting even more strain on the fiat system. As a result, more people lost faith in the fiat system, and this was a key factor fueling the rally over the past three days.
Restore USDC volumes
The aforementioned factors and the fact that USDC has regained its test have restored some confidence in the stablecoin. USDC’s offerings in smart contracts recently bounced back to a new four-month high.
📈 $USDC Percentage of supply in smart contracts just hit a 4-month high of 37.979%
The previous 4-month high of 37.735% was observed on March 13, 2023
View stats: https://t.co/eCjboyzLH7 pic.twitter.com/YKXLRAOwTy
— glassnode alerts (@glassnodealerts) March 15, 2023
But what about the actual market demand? Well, a look at address characteristics revealed that USDC receiving addresses were slightly higher than shipping addresses. Another important observation is that both metrics have dropped significantly since March 11, when people switched to other stablecoins.
Source: Glassnode
However, the addresses began to stabilize as they went to press, suggesting that USDC trading activity is recovering. This can be clearly seen in the stablecoin exchange flows. Both inflows and outflows from the exchange have risen over the past three days after previously tanking due to the depeg.
Source: Glassnode
Market outflows continue to exceed inflows, confirming that USDC has yet to regain full confidence. This may also be due to the recent crypto rally, which meant investors bought crypto for stablecoins.
This post Can circle [USDC] turn things around with a new plan? Everything you need to know
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