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Cryptocurrency

USDC Market Cap Surges 80 Percent from 2023 Lows

Horizonstocks

As the cryptocurrency market continues to evolve, one notable trend is emerging in the stablecoin space: Circle’s United States dollar-backed stablecoin, USD Coin (USDC), has seen its circulating supply rise by an impressive 80% from cyclical lows. According to data from Blockworks Research, this significant increase reflects growing onchain activity and a shift towards alternative layer-1 networks.

A New Era of Stablecoin Adoption

As of January 2, USDC’s circulating supply has reached approximately $44 billion, nearly double the 2023 low of less than $24 billion, as reported by CoinGecko. This surge in demand is not limited to Ethereum, the dominant blockchain network for stablecoins. In fact, users are increasingly migrating beyond Ethereum, with alternative layer-1 networks like Solana and Hyperliquid gaining traction.

The Rise of Alternative Layer-1 Networks

Dan Smith, Blockworks data analytics manager, notes that the shift towards alternative layer-1 networks is driven by growing onchain activity and the need for faster, more efficient transactions. As a result, USDC’s market capitalization may potentially double this year, according to analysts.

Diversifying Networks: A Shift Away from Ethereum

In 2023, USDC remained heavily concentrated on Ethereum, with an astonishing 85% of its circulating supply held on the platform. However, in 2024, a significant change occurred. As of January 2, approximately 65% of USDC supplies are now 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.

Why the Shift Towards Alternative Networks?

The increasing popularity of alternative layer-1 networks like Solana can be attributed to several factors. Grayscale notes that ‘retail traders increasingly enter the crypto market through Solana [as] speculation intensifies around Solana-based memecoins and AI agent tokens.’ This trend is also reflected in the surge in total value locked on Solana, which rose from approximately $1.5 billion in January to nearly $8.5 billion by December, according to data from DefiLlama.

The Impact of Stablecoin Market Capitalization

Stablecoin market capitalizations saw a significant increase after Donald Trump’s presidential election win in the United States. The combined market capitalizations of the top three stablecoins – Tether’s USDt (USDT), USDC, and Dai (DAI) – collectively grew by more than $25 billion, as noted by Citi in a December research note.

A Critical Assumption: The Fate of Tether within the European Union

Cryptocurrency researcher Steno Research expects USDC’s circulating supply to more than double during 2025, reaching highs of around $100 billion. However, this growth 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.

The Bullish Outlook for Decentralized Finance (DeFi)

Accelerating stablecoin adoption is particularly bullish for decentralized finance (DeFi), as ‘stablecoins are the on-ramp to decentralized finance,’ Citi said. 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.

Key Takeaways

  • USDC’s circulating supply has risen by an impressive 80% from cyclical lows.
  • The shift towards alternative layer-1 networks like Solana is driven by growing onchain activity and the need for faster, more efficient transactions.
  • Analysts expect USDC’s market capitalization to potentially double this year.
  • Diversifying networks: A significant change occurred in 2024, with approximately 65% of USDC supplies now 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.
  • Stablecoin market capitalizations saw a significant increase after Donald Trump’s presidential election win in the United States.