Circle’s $11.7 Billion USDC Redemption Sparks Alarming Question: Is the Crypto Giant Facing a Silent Crisis?

Circle’s USDC stablecoin shrank again. In the week ending October 29, Circle cut USDC’s circulating supply by $800 million, bringing the total down to $70 billion.

That is the second weekly drop in a row.

More money walking out than coming in

During the week, Circle issued about $10.9 billion in new USDC. It also redeemed roughly $11.7 billion over the same stretch. More dollars went out the exit than came through the entrance, and the gap was enough to trim $800 million off the total.

The latest decline follows a drop of about $500 million in the week ending October 22. Two straight weeks of net outflows make this more than a one-off.

What’s sitting in the vault

Circle’s reserves stood at roughly $71.4 billion as of October 29. That is more than the $70 billion of USDC in circulation, so each token is still fully backed.

The reserves break down into three main buckets:

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

USDC reserves have consistently run above circulating supply, keeping the token’s 1:1 backing with cash equivalents intact. The $11.7 billion in redemptions was handled without any sign of strain on that backing.

Why Circle’s income statement cares

For Circle as a company, its revenue depends heavily on the interest earned on those reserves. Fewer USDC tokens in circulation mean fewer dollars parked in Treasuries and repos, which means less interest coming in.

That link between supply and earnings has drawn closer scrutiny lately. Circle’s share price targets have been cut, with downgrades tied to concerns that stablecoin demand could move toward alternatives that offer higher yields.

Holder behavior also seems to be changing. The research points to rising caution among market participants. It also flags the possibility that AI-driven investment decisions are influencing where holders keep their money.

What to watch from here

Two weeks of outflows totaling about $1.3 billion are not a collapse. Measured against a $70 billion base, it is a modest decline. Still, Circle’s earnings are sensitive to the size of the float, so even moderate shrinkage gets attention from shareholders.

The next few weekly reports are worth watching. Three metrics carry the most weight:

• Net supply change: whether the streak of weekly declines continues, flattens, or reverses
• Gross issuance vs. redemption: a recovery in issuance relative to redemptions would show demand coming back, not just outflows slowing
• Reserve composition: how Circle splits its holdings between overnight repos, short-dated Treasuries, and bank deposits as supply moves

Roughly $11.7 billion went out in a week, reserves still sit above circulating supply, and the backing held at 1:1.