Tether’s USDT supply has shrunk by $5.5 billion since early May, falling from $189.54 billion to about $184 billion on July 29. This marks a significant dip amid a broader decline in stablecoin market capitalization, which dropped almost $14 billion from its May peak of $322 billion to around $308 billion. June alone accounted for a $7.7 billion decrease, the largest monthly contraction since the Terra collapse in 2022.
However, this shrinking supply contrasts sharply with soaring transaction volumes. Stablecoin turnover reached a record $1.83 trillion in June, a 60% jump compared to May and more than double the volume seen a year ago. This suggests a fundamental shift where fewer stablecoins are held idle, and the remaining tokens are circulating much faster across trading and settlement networks.
Meanwhile, Circle’s USDC supply also contracted, dropping from $77.27 billion to $72.41 billion in the same period. Part of the capital leaving stablecoins appears to be moving into tokenized Treasury products, which have grown from about $11 billion in March to over $16 billion recently, according to data from rwa.xyz. These products offer yield opportunities that payment stablecoins currently cannot due to regulatory limitations imposed by the GENIUS Act of July 2025, which bans issuing interest directly on payment stablecoins.
This evolving landscape is shifting attention from market capitalization to transaction velocity as the key indicator of stablecoin market health and usage patterns.
This content is for informational purposes and does not constitute financial advice.
