CoinGecko: after Tether lost its dollar peg, leading to $8.5B+ in redemptions, Circle's USDC stablecoin circulation rose by $3.4B and Binance USD is up $1.2B
Circle's USD Coin is reaping the benefits as circulation of Tether, the world's largest stablecoin and its closest rival, continues to decline in a wave of redemptions. Tweets: @chrisbloomstran , @toby_n , @jeetsidhu_ , @toby_n , @davetroy , @cryptoseq , @degenspartan , @degenspartan , @biancoresearch , @biancoresearch , @biancoresearch , @bennetttomlin , @mdudas , @zhusu , and @mdudas Tweets: Christopher Bloomstran / @chrisbloomstran : Tether bleeding another $1.5 billion and $9 billion over the past week. The fraud of unaudited reserves will be readily apparent. Commercial paper? A lie. Treasuries? So far beyond Madoff. Who believes this nonsense? Massive Ponzi. If you are still in you get what you deserve. https://twitter.com/... Toby Nangle / @toby_n : c$7bn out outflows from Tether in past 72hrs. https://twitter.com/... Jeet / @jeetsidhu_ : chart crime: posting a chart showing users redeeming $9 billion over the last week implying it's a huge negative instead of just a normal market operation cash reserves available to meet client withdrawals seems.... good? https://twitter.com/... Toby Nangle / @toby_n : Another $1.5bn outflow from Tether overnight. $10bn out on the week. https://twitter.com/... @davetroy : Losing $1bn in market cap every couple of days. Tether is imploding at roughly the same rate as Russia, and may collapse at about the same time, if these conditions persist. When Tether goes, the entire crypto market falls. https://twitter.com/... @cryptoseq : Around $10 Billion USDT has been withdrawn in the last week showing Tether has the liquidity for now but are being severely tested. If they lose the case & the public are able to see a breakdown of the reserves then this could either reassure markets or add to the panic. https://twitter.com/... @degenspartan : is it just arb on the tether situation earlier? maybe usdt -9b usdc +4b still 5b of outflows tho 5b that couldve been used to pump the mcap of our ponzis by 100b (assuming 20x multiplier effect) @degenspartan : do not i repeat DO NOT let the patrons leave the casino https://twitter.com/... @biancoresearch : 1/3 The Tether story that began last week might not be done. Redemptions in Tether began last week, the day it broke its peg (down to 95 cents). They have not yet stopped. https://twitter.com/... @biancoresearch : 2/3 Its current redemptions, at 10.93%, are the largest since DeFi summer (spring 2020). The current structure of DeFi primitives have not been through this big a Tether redemption cycle. https://twitter.com/... @biancoresearch : 3/3 Curve's 3pool continues to stay unbalance at 74% Tether. Not enough for it to break the peg, but enough that Tether consistently stays in the southside of $1.00 (0.998 or so) and DAI/USDC consistently stay on the northside of $1.00 ($1.002 or so). Both round to $1.00 https://twitter.com/... Bennett Tomlin / @bennetttomlin : It's really weird that Tether only grows and then redeems $7bn all at once and USDC seemed to be regularly redeeming and then grew several billion basically at once https://twitter.com/... Mike Daodas / @mdudas : This is a great self-own. Each one of these stable dollars leaving @Tether_to has been redeemed for fiat dollars. Gotta update the 2018 talking points. https://twitter.com/... Zhu Su / @zhusu : This proves the opposite, which is that USDT is redeemable, in size, for USD https://twitter.com/... Mike Daodas / @mdudas : Should add a bit more nuance. I still feel more comfortable with my money in USDC / USDP due to quality of reserves. They are factually better than USDT reserves. Just tired of “Ponzi” talking points. Tether disclosed collateral, NY AG dove deep and left with small fine, etc. https://twitter.com/...
Context & Ripple Effects
The rotation began with the failure of an algorithmic rival: UST lost its dollar peg on May 10 after the Luna Foundation Guard pledged $1.5B of bitcoin reserves to defend it, and contagion spread within days to Tether, the largest stablecoin. By May 17 analysts counted $7.6B withdrawn since Thursday, nearly twice Tether's end-2021 cash reserves, setting up this week's peg break and redemption wave.
First-order effects
- Tether has paid out over $8.5B in redemptions since briefly losing its dollar peg, shrinking the world's largest stablecoin while its accounting firm separately disclosed $20.1B in commercial paper holdings, down 17% quarter over quarter.
- Circle's USDC absorbed roughly $3.4B of the outflows and Binance USD another $1.2B — a direct market-share transfer from USDT to its two closest rivals as traders seek reserves they consider more transparent.
Second-order effects
- Public commentators including Christopher Bloomstran and Bennett Tomlin are pressing the unaudited-reserves question during the run, forcing Tether toward faster disclosure of its asset mix to stop further redemptions.
- Exchanges and DeFi venues that price pairs against USDT face pressure to deepen USDC and BUSD liquidity, shifting listing economics and fee flows toward Circle and Binance's stablecoin.
Third-order effects
- If confidence keeps migrating, stablecoin leadership consolidates around issuers with auditable reserves, while Tether's own disclosures — including $6.1B in loans denominated and payable in its own token — become the case study regulators cite for why reserve transparency must be mandatory rather than voluntary.
The trend: Crypto's dollar-pegged money is rotating from the largest but least transparent issuer toward audited rivals, with each depeg accelerating the shift.