Stablecoin Supply Begins To Shrink After Months Of Growth

After months of steady expansion through 2025, stablecoin supply across the crypto market is now moving in the opposite direction.

Ethereum-based stablecoins, which make up a large portion of crypto liquidity, have declined over the past week, signaling a potential shift in investor behavior and short-term market sentiment.

One of the major drivers behind the drop is Tether’s Treasury burning $3 billion worth of USDT, effectively removing a massive chunk of liquidity from circulation. While token burns can serve different purposes, in this context it reflects falling demand for stablecoins, a sign that capital may be exiting the crypto ecosystem rather than rotating within it.

For a market that relies heavily on stablecoins as its primary source of trading liquidity, this shift is raising concern among analysts watching for signs of deeper weakness ahead.

Normally, when traders sell Bitcoin or altcoins, that money doesn’t immediately leave crypto. Instead, it typically moves into stablecoins like USDT or USDC, waiting for new buying opportunities.

This time, that pattern is breaking.

According to blockchain analytics firm Santiment, stablecoin supply has continued to fall alongside Bitcoin’s price decline, suggesting that investors are converting crypto holdings back into fiat rather than parking funds on-chain.

Santiment’s data, shared on X and reported by Decrypt Media, shows that the combined market cap of the top 12 stablecoins dropped $2.24 billion over just 10 days as Bitcoin slid from $95,000 to $88,400. The original breakdown can be found directly from Santiment.