Top Stablecoins Shed $7B In May As Traders Redeem Tokens En Masse

The top four stablecoins by market capitalization have shrunk around 4% in May, with Tether losing 11% of its supply to redemptions

article-image

Blockworks Exclusive Art by Axel Rangel

share

key takeaways

  • Stablecoin holders are exchanging their tokens for cash, in some cases reducing the coins’ overall supply
  • Tether and DAI have shrunk the most throughout May so far

The top four stablecoins by market capitalization have lost nearly $7 billion from their collective supplies this month, as big money traders seek to redeem their tokens for cash.

Stablecoins Tether (USDT), Circle’s USD Coin (USDC), Binance USD (BUSD), and DAI together boasted nearly $159 billion supply at the start of May.

Intense market volatility and reduced risk tolerance in light of Terra’s collapse has sent that figure below $152 billion — a drop of more than 4%.

MakerDAO’s overcollateralized stablecoin DAI has lost the most supply this month on a percentage basis. Its market value on May 1 was $8.5 billion, according to CoinGecko data. Now, it’s a little over $6.2 billion — representing a 26% fall.

USDT was the second-hardest-hit. The largest stablecoin has shrunk by $9 billion in the month-to-date, an 11% drop. Bitcoin’s price fell around 25% in that time while ether crumbled by 30%.

USDT and USDC holders can exchange their tokens for US dollars from Tether and Circle respectively at a 1:1 ratio. Low demand leads to those redeemed tokens being burned.

BUSD users, however, can’t redeem their tokens via Binance directly. White-label stablecoin issuer Paxos handles BUSD redemptions instead. DAI is more decentralized — users can only redeem tokens for collateral under certain emergency conditions.

USDC and BUSD have actually grown throughout May’s market turmoil. USDC’s market value has jumped almost 7.5% — from more than $49 billion to a tad less than $53 billion. This is despite losing more than $3 billion from its market value throughout March and April.

Crypto exchange Binance’s stablecoin offering has added 5.5% so far this month; its market value rising from around $17.7 billion to $18.6 billion at press time.

At Blockworks’ Permissionless conference in Palm Beach on Wednesday, Circle’s Joao Reginatto told the crowd the stablecoin issuer had redeemed $7 billion USDC last week, equal to 11% of Circle’s total redemptions from 2021. 

But while May has seen the top stablecoins shrink, their total market value is still up 5.5% in the year-to-date, having added almost $8 billion.

USDC has grown 20% with $10.6 billion more tokens in circulation. BUSD boosted up 22% — representing growth of $4.2 billion. USDT has shed about $4.1 billion, a 5% reduction, while DAI dwindled by 30% — from $8.9 billion to $6.2 billion.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

BUZZ holds shares of Coinbase, Robinhood and MicroStrategy

article-image

Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile

article-image

The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally

article-image

While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders

article-image

Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume

article-image

DeFi on Bitcoin is all the rage right now and Stacks is positioned to benefit