Circle has approximately $11.7 billion worth of its USDC stablecoin in the week ending October 29, with redemptions exceeding new issuance for the second consecutive week, reducing the token's circulating supply by $800 million to $70 billion.

In the same period, Circle issued approximately $10.9 billion in new USDC. More dollars flowed out through redemptions than came in through minting, and that gap was large enough to reduce total circulation by $800 million. The issuance remained substantial in absolute terms but fell short of the redemption volume.

The latest decline follows a drop of approximately $500 million in the week ending October 22, bringing cumulative net outflows over the two-week period to approximately $1.3 billion. Two consecutive weeks of net outflows make this more than a one-off.

USDC is a stablecoin pegged to the US dollar, issued by Circle, and one of the largest stablecoins by circulation. The supply grows when new tokens are issued against dollar deposits and shrinks when holders redeem tokens for cash, so the weekly balance between issuance and redemptions directly determines total circulation.

Reserves remain above circulating supply

Circle's reserves stood at approximately $71.4 billion as of October 29, more than the $70 billion worth of USDC in circulation. This surplus means that each token remains fully backed. The reserves consist of three main components:

• $32.9 billion in overnight reverse repurchase agreements with the Treasury
• $27.5 billion in US Treasuries with a maturity of less than three months
• $10.4 billion in deposits at major institutions, including systemically important banks

The total reserves of $71.4 billion provided a buffer of approximately $1.4 billion above the outstanding USDC amount. USDC reserves have consistently been above the circulating supply, keeping the token's 1:1 coverage with cash equivalents intact, and the $11.7 billion in weekly redemptions was processed without any sign of strain on this coverage.

Why Circle's income statement is affected

For Circle as a company, revenue largely depends on the interest earned on these reserves. The more tokens are in circulation, the more dollars can be parked in Treasuries and repurchase agreements; fewer outstanding tokens means less interest income.

This link between supply and earnings has recently come under closer scrutiny. Circle's price targets have been lowered, with downgrades tied to concerns that stablecoin demand could shift toward alternatives that offer higher yields.

Holder behavior also appears to be changing. The research points to growing caution among market participants. It also highlights the possibility that AI-driven investment decisions are influencing where holders hold their funds.

What to watch going forward

Two weeks of outflows totaling approximately $1.3 billion is not a collapse. Measured against a base of $70 billion, this amounts to a decline of roughly 1.9 percent — modest in relative terms. Still, Circle's earnings are sensitive to the size of the circulating supply, so even moderate shrinkage gets attention from shareholders.

The coming weekly reports will show whether the current pattern persists. Three metrics carry the most weight:

• Net supply change: whether the series of weekly declines continues, flattens, or reverses
• Gross issuance vs. redemption: a recovery in gross issuance relative to redemptions would show genuine demand returning, rather than just a slowdown in outflows
• Reserve composition: how Circle splits its holdings among overnight reverse repos, short-term Treasuries, and bank deposits as the supply moves

In review of the week: approximately $11.7 billion flowed out, reserves remain above the circulating supply, and the coverage held at 1:1.

This article is based on reporting by CryptoBriefing, edited by Kaye Quema.