Solana (SOL) absorbs additional $2.5B USDC in one week of renewed meme activity

One of the side effects of Official Trump (TRUMP) on Solana was the rapid pace at which Circle had to mint new USDC stablecoins. The increased liquidity was issued to boost the most active trading pairs with increased mainstream interest. 

Solana (SOL) carries a higher level of stablecoin liquidity after a series of new USDC mints in the past week. In the last 24 hours, Solana added another 1B new tokens, while the mints have reached 2.5B new tokens in a matter of weeks.

USDC’s growth started at the end of 2024 in response to tougher regulatory conditions for Tether (USDT) in the Euro Area. The specific mints on Solana point follow a pattern of decentralized activity and demand for concentrated liquidity.

Some of the recently minted USDC was transferred to Coinbase, which also became a hotspot for SOL and meme token trading. 

🚨 🚨 🚨 🚨 🚨 🚨 🚨 🚨 🚨 🚨 800,000,000 #USDC (799,998,000 USD) transferred from USDC Treasury to #Coinbasehttps://t.co/P83POIAsku

— Whale Alert (@whale_alert) January 21, 2025

USDC was spreading gradually to Solana, for a long-running trend that boosted stablecoin liquidity above $10B. The growth of new stablecoin inflows went vertical in the past week, adding to Solana’s total value locked. Currently, the chain carries peak liquidity, breaking the record from 2021. Most of the renewed DeFi activity on Solana was on DEX, with some of the stablecoins flowing into DeFi protocols. 

The expansion of USDC arrives at a time when stablecoins are constantly setting new records. The total supply of all asset-backed and synthetic tokens is over 209B, with targeted liquidity on some exchanges and pairs. 

However, not all Solana users had a positive experience with the increased liquidity. USDC may be intuitive and transparent, but Solana congestion and failed transactions make the asset unusable. Users complained of delayed transactions and a long waiting time, which meant they missed some of the rallies of the newly launched meme tokens. 

The other criticism is that USDC is used to extract value from Solana, with the tokens and memes abandoned on the network after their peak. 

USDC becomes the fastest-growing asset

USDC expanded its supply to over 51B tokens after months of being stuck near the 30B range. In the past 30 days, it added a net of 959.4M tokens, shifting the balance of flows. For now, it has a slower daily turnover, with volumes of $17B, a fraction of the Circle-issued stablecoin’s total supply.

Notably, while USDC was burned on other networks, it had a long series of non-stop mints on Solana. The mints were for equal tranches of 250M tokens, suggesting either aggregated demand or institutional clients. The stablecoin is considered a fully asset-backed token, in which the new mints only follow fiat deposits. 

The large-scale inflow of funds on Solana points to professional or institutional investors, who are preparing for more active trading. USDC is seen as a more suitable tool to retain gains from trading, increasing the possibility for stablecoin pairs. It also trades at a slight premium on Solana, despite the active printing. 

Most Solana trades and stablecoin usage are still microtransactions. However, USDC is held by large-scale whales and concentrates on some of the centralized exchanges and highly liquid DEXs. 

The inflow of USDC followed the growth of value locked on Kamino, adding new assets for lending during a period of active DEX trades. 

USDC flows in ahead of Solana ETF decision 

The minting activity accelerated ahead of the two deadlines for Solana’s latest ETF filings. As of January 23, a decision may come for the Grayscale ETF proposal. Two days later, a decision will be made for the funds proposed by VanEck, 21Shares, Bitwise, and Canary. 

The inflow of stablecoins may boost the underlying L1 asset. SOL has been considered undervalued, based on its on-chain economic activity and recent peak usage. 

Bitwise remains the most bullish potential ETF issuer, envisioning prices of over $6,000 in the coming years. SOL is expected to take up a trajectory similar to ETH, as it displaced the Ethereum chain as the leading venue for new token launches. 

After the inflow of USDC, SOL recovered to $253.12, though still far from the recently predicted rally to $300.

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