Recently, the market has been volatile, and many are still debating the short-term fluctuations of BTC and ETH. However, what truly influences your returns often hides in less obvious corners—such as the ecosystem changes of stablecoins. After analyzing some data, I found that the circulation of USDC has been steadily decreasing recently. This is not a minor fluctuation typical of retail investors; behind it is institutional capital shifting in an orderly manner. The significance of this signal is comparable to any technical event in the broader market.

Although USDC and USDT both carry the name of stablecoins, they serve different audiences, operate within different ecosystems, and are based on different logic.

USDT is currently the most widely used stablecoin. It mainly circulates on public blockchains like TRON, with low transfer costs, giving it an advantage in cross-border payments and retail trading. While Tether, as the issuer, is large in scale, its transparency regarding reserve assets has periodically sparked market discussions over the years.

In contrast, USDC follows a "sunlight" approach. Issued by the US-listed company Circle, it is under strict federal regulation. Its reserve composition is relatively simple—mainly cash and short-term US Treasuries. It undergoes monthly audits by top firms like Deloitte, ensuring much higher transparency. This background makes Wall Street institutional funds, traditional financial players with strict compliance requirements, and those handling large positions in DeFi more inclined to choose USDC. Many larger DeFi protocols also list USDC as a core collateral asset.

Therefore, when USDC’s circulation shrinks significantly, it actually signals that some funds are adopting different allocation strategies. The underlying logic behind this warrants careful consideration.