USDC Market Cap Sees 80 Percent Increase From 2023 Lows

The circulating supply of Circle’s United States dollar-backed stablecoin, USDC, has experienced a significant surge of 80% from cyclical lows as on-chain activity picks up. According to data from Blockworks Research, the current circulating supply is approaching $44 billion, nearly double the 2023 low of less than $24 billion.

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Growing Demand for Stablecoins

The increasing popularity of stablecoins can be attributed to their growing adoption in decentralized finance (DeFi) applications. As Citi noted in a December research note, "stablecoins are the on-ramp to decentralized finance." This trend is expected to continue, with USDC’s market capitalization potentially doubling this year.

Diversifying Networks

As users migrate beyond Ethereum, holdings of USDC are becoming more evenly distributed among blockchain networks. According to Blockworks data analytics manager Dan Smith, approximately 65% of USDC supplies are currently on Ethereum, while 10% are on Solana and roughly 15% span Base and Arbitrum — both Ethereum layer 2s — as well as Hyperliquid, a layer 1 for low-latency trading.

Shift from Conventional to Alternative Layer-1 Networks

In 2023, USDC remained heavily concentrated on Ethereum, which held 85% of the stablecoin’s circulating supply. However, this trend is changing with increasing on-chain activity and the rise of alternative layer-1 networks such as Solana and Hyperliquid.

Growing Influence of Alternative Layer-1 Networks

The shift towards alternative layer-1 networks can be attributed to the growing popularity of Solana-based memecoins and AI agent tokens. As Grayscale noted in a December research note, "retail traders increasingly enter the crypto market through Solana [as] speculation intensifies around Solana-based memecoins and AI agent tokens."

Onboarding Users

The total value locked on Solana surged from around $1.5 billion in January to nearly $8.5 billion by December, according to data from DefiLlama. This growth is expected to continue, with USDC’s circulating supply potentially reaching highs of around $100 billion during 2025.

Accelerating Stablecoin Adoption

The combined market capitalizations of the top three stablecoins — Tether’s USDt (USDT), USDC, and Dai (DAI) — collectively grew by more than $25 billion following Donald Trump’s presidential election win in the United States. Cryptocurrency researcher Steno Research expects USDC’s circulating supply to more than double during 2025.

Critical Assumptions

Steno’s prediction hinges on a critical assumption: that Tether, the largest stablecoin, remains unregulated within the European Union. If this scenario unfolds, we expect European residents to increasingly adopt USDC as an alternative to Tether’s USDT.

Bullish for DeFi

Accelerating stablecoin adoption is particularly bullish for decentralized finance (DeFi), as it provides users with a secure and reliable means of participating in the ecosystem. As Citi noted, "stablecoins are the on-ramp to decentralized finance."

Top Tokens to Watch in Q1 2025

In December, Grayscale added several DeFi applications, including two on Solana, to its list of the top 20 tokens to watch in the first quarter of 2025. They include Ethena, Jupiter, and Jito.