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Top stablecoins shed $7bn in May as traders redeem tokens en masse – Crypto News Australia

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

The four largest stablecoins by market cap have lost nearly $7 billion from their collective supplies this month as big money traders look to redeem their tokens for cash.

Stablecoins Tether (USDT), CircleUSD (USDC), Binance USD (BUSD) and DAI all boasted a combined offering of nearly $159 billion in early May.

Intense market volatility and reduced risk tolerance in the wake of Terra’s collapse pushed that number below $152 billion — down more than 4%.

MakerDAO’s over-collateralized stablecoin DAI has lost the most supply this month. According to CoinGecko data, its market value as of May 1 was $8.5 billion. It’s now just over $6.2 billion — down 26%.

USDT was the second hardest hit. The largest stablecoin is down $9 billion month to date, down 11%. Bitcoin’s price fell about 25% during this period, while Ether fell by 30%.

USDT and USDC holders can exchange their tokens for US dollars from Tether and Circle at a 1:1 ratio respectively. Low demand will result in these redeemed tokens being burned.

However, BUSD users cannot redeem their tokens directly through Binance. White label stablecoin issuer paxos processes BUSD redemptions instead. DAI is more decentralized – users can only redeem tokens for collateral under certain emergency conditions.

USDC and BUSD actually grew during the market turmoil in May. USDC’s market value is up nearly 7.5% — from more than $49 billion to just under $53 billion. This is despite the fact that the company lost more than $3 billion of its market value in March and April.

Crypto exchange Binance’s stablecoin supply is up 5.5% so far this month; its market value has increased 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 that the stablecoin issuer redeemed $7 billion USDC last week, accounting for 11% of Circle’s total redemptions as of 2021.

But while the top stablecoins shrank in May, their total market value is still up 5.5% year-to-date after gaining nearly $8 billion.

USDC is up 20% with $10.6 billion more tokens in circulation. BUSD is up 22% — a growth of $4.2 billion. USDT is down about $4.1 billion, a 5% reduction, while DAI is down 30% — from $8.9 billion to $6.2 billion.

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The Top Stablecoins Shed $7B In May As Traders Redeem Tokens En Masse post is not financial advice.

Source: Crypto News Austria

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