I’ve scaled back my $USDC holdings today. I hope I’m wrong… But there are a few red flags I can’t ignore. 👇 # 
USDC #Circle#FOMCMeeting
2/ $USDC supply has doubled in the last year — from $30B in June 2024 to $60B today. 🚀 +100% growth.
It's the 2nd largest stablecoin, often seen as the “safe, compliant” option.
But size ≠ safety. Let's talk risk.
3/ Circle, the issuer of $USDC, recently went public. Its stock jumped +160% post-IPO. 🚀
Great for them, but there's a problem: Circle doesn’t sell anything.
Their only revenue source? Earning yield from U.S. Treasury instruments.
4/ That’s right: 💰 50% in Treasury Debt 💰 50% in Repo Agreements 📉 100% exposed to U.S. interest rate fluctuations
This model works when the Fed is cutting rates (as it has been). But what if they pivot?
5/ One major risk: Escalating tensions in the Middle East. A closure of the Strait of Hormuz (where 40% of global oil flows) could spike energy prices.
That → U.S. inflation → Rate hikes by the Fed.
6/ If rates rise, Circle's bond portfolio could lose market value. If redemptions spike during a crisis, they might be forced to sell at a loss.
In crypto, depegs can happen fast. Think $UST — not in size, but in speed. ⚠️
7/ To make things worse: 🔹 Coinbase takes 50% of Circle’s USDC revenue.
Yes, even during a liquidity crunch.
That limits Circle’s flexibility when it might matter most.
8/ Circle says their T-Bill maturity is short — avg. ~20 days, with 50% maturing in 7.
But in crypto, 7 days is an eternity during a redemption wave.
9/ Circle has essentially gone all-in on one trade: 📉 Bet: Interest rates will keep falling 📈 Risk: Rates rise amid war or inflation = trouble
Diversification would help. They haven’t done it.
10/ Not FUD. Just caution. I still believe in stablecoins and transparency.
But right now, I’d rather stay light on $USDC. Until Circle adapts their reserve strategy, I’m playing defense.
Stay safe. 🧠 #USDC #Circle #Stablecoins #FOMC #CryptoRisk #BinanceTGE