Stablecoin supply has shrunk by $14.2 billion. According to The Block, that is the biggest contraction since the 2022 bear market. USDT and USDC alone lost almost $11 billion in circulation over the past month.
In numbers, that is about 4.8% of the whole segment, which DefiLlama now puts at roughly $290 billion against $305 billion a month ago. A market that sat flat in October has moved down for the first time in a long while.
The biggest squeeze since 2022
The 2022 bear market brought the Terra and FTX collapses, and stablecoin issuance fell for several months in a row. The current drop of $14.2 billion is the largest since then. It comes alongside a bitcoin price that sits below $74,000, while spot Bitcoin funds, according to CoinDesk, have bled money for a fourth straight day.
Tokens backed by gold, The Block reports, stayed almost flat. So money is not leaving every stable asset, only the dollar ones used for trading.
USDT and USDC each lost about 4% in a month
According to DefiLlama, Tether circulation fell from $184.0 billion to $175.7 billion. That is down $8.3 billion, or 4.5%. Circle's USDC shrank from $72.9 billion to $70.0 billion, down $3.0 billion (4.1%). Together that is $11.3 billion, slightly above The Block's estimate, because sources count circulation differently.
That last figure matters. If Tether's share stands still, everyone is shrinking in proportion, and clients of one issuer are not simply running to another. It looks like capital leaving the crypto market, not a reshuffle inside the segment.
Who fell harder and who grew
Percentage losses are higher at smaller issuers. World Liberty's USD1 fell from $4.27 billion to $3.25 billion, down 24%. USDS (the former Sky DAI) lost $1.55 billion, from $6.91 billion to $5.36 billion, or 22%. Paxos's USDG slid 11% and PayPal's PYUSD 4.5%.
The one visible exception was Ethena's USDe. Its supply rose from $4.76 billion to $4.90 billion, a 3% gain. The older DAI barely moved ($4.64 billion against $4.75 billion).
Where the money is going
The Block does not name a direct cause in this piece, so what follows is only coincidence in timing. US inflation rose 0.4% in October, traders price in a risk of a Fed rate hike, and bitcoin ETFs lost $1.6 billion in a day. Separately, more than $7 billion left Binance after its record hack, and part of that money may well have settled in fiat.
When users withdraw funds, the issuer burns tokens and supply shrinks. That makes stablecoin contraction a thermometer. It shows that less new money is coming into crypto than going out.
Competitors are moving too. Goldman Sachs and Citi, with other banks, committed $270 million to their own stablecoin, but that is a story about future supply, not a cause of the current drop.
Risks and scenarios for the coming weeks
For Ukrainians, a drop in issuance does not break the peg by itself, since USDT still trades near a dollar. Liquidity is another matter. Anyone planning to sell USDT for hryvnia should compare several exchangers, because spreads can diverge more during outflows.
- Further decline: if bitcoin heads to $70,000, which options traders are betting on according to The Block, the outflow may continue.
- Stabilization comes once the market finds a floor and ETFs stop losing money.
- A reversal is possible if new issuance of USDe and bank tokens return the segment to growth, though not quickly.
The result in numbers
The stablecoin market shrank by $14.2 billion, to $290 billion. USDT and USDC account for most of the drop, while gold tokens came through without losses. I would not call a crisis on one month of data, but the direction is clear. If the outflow goes on, the next DefiLlama readings will show whether this is a pause after the Binance hack or the start of a longer contraction.
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