Top Stablecoins Lose $7 Billion In May As Traders Redeem Tokens In Bulk

In May, the top four stablecoins by market capitalization shrank by about 4%, with Tether losing 11% of its supply due to redemptions.

The top four stablecoins by market capitalization have lost roughly $7 billion in total supply this month as big money traders attempt to cash out their tokens.

Tether (USDT), Circle’s USD Coin (USDC), Binance USD (BUSD), and DAI had a combined supply of almost $159 billion at the start of May.

Intense market volatility and reduced risk tolerance in the aftermath of Terra’s downfall have pushed that number below $152 billion, a drop of more than 4%.

DAI, MakerDAO’s overcollateralized stablecoin, has lost the greatest supply this month in terms of percentage. According to CoinGecko data, its market value on May 1 was $8.5 billion. It is now somewhat more than $6.2 billion, a decrease of 26%.

USDT took the second-heaviest hit. The largest stablecoin has shrunk by $9 billion in the month to date, representing an 11% decrease. During that time, the price of bitcoin decreased by about 25%, while the price of ether fell by 30%.

USDT and USDC holders can swap their tokens for US dollars at a 1:1 ratio through Tether and Circle, respectively. Due to a lack of demand, redeemed tokens are burned.

BUSD users, on the other hand, are unable to redeem their tokens directly through Binance. Paxos, a white-label stablecoin issuer, handles BUSD redemptions instead. DAI is more decentralized; users can only redeem tokens for collateral in emergency situations.

Despite the market turbulence in May, USDC and BUSD have increased. USDC’s market value has increased by over 7.5%, from more than $49 billion to slightly less than $53 billion.

Binance’s stablecoin offering has gained 5.5% this month, increasing its market value from about $17.7 billion to $18.6 billion at press time.

Circle’s Joao Reginatto told the attendees at Blockworks’ Permissionless conference in Palm Beach on Wednesday that the stablecoin issuer has redeemed $7 billion USDC last week, accounting for 11% of Circle’s total redemptions from 2021.

While the leading stablecoins have shrunk in May, their entire market value is still up 5.5 % year to year, having added nearly $8 billion.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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