Ethereum News Today: USDC Circulating Supply Drops $1.1 Billion Amid Market Liquidity Shifts

The circulating supply of USDC, one of the most widely used stablecoins, declined by approximately $1.1 billion in the past week, signaling shifts in market liquidity and stablecoin demand across major blockchain networks. This reduction is primarily concentrated on Ethereum, where USDC holds a dominant 64% of its total supply. The drop reflects broader rebalancing in institutional and market positions, with on-chain data from dashboards confirming the trend [1].

To maintain its $1 peg amid evolving market conditions, USDC executed a $55 million Ethereum token burn on August 1, 2025. This strategic move underscores the stablecoin’s ongoing efforts to preserve stability in the face of regulatory and liquidity pressures. Circle, the issuer of USDC, has consistently emphasized its commitment to transparency and full reserve backing, although no direct comments from its leadership were found in recent reports [1].

The decline in USDC supply is not without precedent. During the regional banking crisis in mid-2023, USDC briefly lost its dollar peg, falling to $0.87. This event exposed vulnerabilities in stablecoins, even those considered highly reliable, and highlighted the need for proactive management of liquidity and confidence. The recent burn suggests continued efforts to reinforce USDC's peg and reassure market participants [2].

Despite recent supply contractions, USDC maintains a strong presence in key blockchain ecosystems. On Solana, its market share in stablecoin activity exceeds 72%, with total circulation surpassing $87.9 billion. This dominance positions USDC as a critical liquidity driver in decentralized finance (DeFi) and cross-chain transactions [3].

Broader market trends also reflect shifting liquidity dynamics. For instance, OKX’s USDT reserves increased by 4.62% in July 2025, reaching $7.9 billion as traders reallocated assets in anticipation of market movements. This shift illustrates how stablecoin demand is increasingly responsive to sentiment and regulatory developments [4].

The broader cryptocurrency market has seen heightened volatility, with altcoins leading a downturn and over $751 million in liquidations recorded in a 24-hour period. Bitcoin also dropped to a July low during this period, signaling broader risk-off sentiment and contributing to ongoing liquidity shifts in stablecoin markets [5].

While USDC’s supply contraction is not indicative of immediate structural risks, it does highlight the evolving nature of stablecoin markets. Historical events such as the 2023 peg loss serve as reminders that even the most stable assets are not entirely insulated from systemic pressures. However, the continued dominance of USDC in major blockchain networks and its proactive management strategies suggest a resilient value proposition moving forward.

Source:

[1] title1 (https://www.analyticsinsight.net/news/ethereum-news-today-usdc-burns-55m-in-eth-to-sustain-1-peg-amid-regulatory-shift)

[2] title2 (https://www.mitrade.com/au/insights/news/live-news/article-8-1004482-20250801)

[3] title3 (https://www.ainvest.com/news/solana-news-today-solana-stablecoin-transfers-surge-53-july-215-billion-defi-revival-2508/)

[4] title4 (https://www.ainvest.com/news/ethereum-news-today-okx-usdt-reserves-rise-4-62-traders-shift-stablecoin-liquidity-2508/)

[5] title5 (https://cryptoslate.com/altcoins-lead-crash-as-751m-liquidated-in-last-24-hours-as-bitcoin-falls-to-july-low)