In brief
- Total stablecoin supply has dropped by $14.2 billion over 30 days through Nov. 9, its steepest decline since June 2022, according to Glassnode.
- U.S. spot Bitcoin ETFs recorded roughly $1.6 billion in net redemptions, and Bitcoin fell below the short-term holder cost basis of around $75,600.
- Glassnode said leverage has been wiped out and large wallets have started buying, while banks are increasingly competing with stablecoins.
The pool of dollars that powers crypto trading is shrinking.
Total stablecoin supply has fallen by $14.2 billion over the past 30 days through Nov. 9, the sharpest contraction since June 2022, according to a report released Wednesday by onchain analytics firm Glassnode.
Total stablecoin supply now sits just under $280 billion.
Stablecoins, tokens usually pegged to the U.S. dollar, function as crypto's cash. Traders move money into them on exchanges and onchain before buying other assets.
When stablecoin supply contracts, holders are redeeming tokens for dollars and taking that money out of crypto altogether, which Glassnode said leaves the market with “less fuel for a rally.” The firm said a return to supply growth would be the first sign that fresh capital is entering.
The stablecoin outflow is not the only sign of money leaving. U.S. spot Bitcoin ETFs logged about $1.6 billion in net redemptions over 20 trading sessions, the report found, and Bitcoin has been trading at a discount on Coinbase, a gauge of U.S. demand.
Bitcoin also dipped below the average cost basis of short-term holders, about $75,600, leaving most recent buyers underwater, and traded near $73,000 on Wednesday. More than $3.6 billion in Bitcoin was recently transferred to exchanges, possibly to be sold at a loss, according to a separate CryptoQuant report published today.
Glassnode did identify some silver linings. The selloff has cleared out most leveraged long positions near the current price, buy orders outnumber sell orders in the order book, and wallets holding between 100 and 10,000 BTC have begun accumulating.
The firm labeled $73,000 as key support and said the broader trend change that started in August remains intact as long as Bitcoin stays above its June low.
The contraction comes as stablecoins face mounting competition from traditional finance.
Global banks including Goldman Sachs, Citi, and Deutsche Bank are backing a $270 million challenge to crypto's dominant stablecoin issuers, and the Federal Reserve recently unveiled stablecoin rules covering reserves and capital.
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