The stablecoin market continues to lose value as declining token supplies weigh on the broader cryptocurrency sector.
Circle’s USDC accounts for most of the recent contraction, while Tether’s USDT maintains its market dominance.
Other stablecoins have recorded mixed performances, reflecting uneven demand across the sector. Meanwhile, shrinking tokenized Treasury holdings and weaker crypto markets have raised concerns about stablecoin supply growth.
USDC leads stablecoin market decline with $4.69 billion loss
Circle’s USDC accounted for approximately 80% of the net 30-day decline among the 13 largest stablecoins. DeFiLlama data through October 25 showed that USDC lost $4.69 billion in market capitalization.
The 13 largest stablecoins recorded a combined net decline of $5.82 billion during the period. USDC’s market capitalization stood at $71.743 billion after losing $878.72 million over seven days.
Meanwhile, the broader stablecoin market declined to $300.36 billion on October 25. DeFiLlama figures indicated a $12.73 billion contraction since May 22.
Tether’s USDT also recorded losses but maintained its leading position in the stablecoin market. Its capitalization reached $182.423 billion, representing a 60.74% market share.
USDT lost $1.29 billion over 30 days and another $990.43 million during the previous week. Across the 15 largest stablecoins, seven-day net losses totaled approximately $1.90 billion.
USDe and USD1 decline while PYUSD records growth
Other major stablecoins recorded varying market capitalization changes during the month. Ethena’s USDe declined by $305.61 million, while World Liberty Financial’s USD1 lost $444.67 million, representing a 10.10% decrease.
However, Falcon’s USDf expanded by $511.16 million, marking a 42.32% monthly increase. PayPal’s PYUSD also gained $239.53 million during the same period.
Stablecoin issuance generally increases circulating supply, while fiat redemptions reduce it. Consequently, sustained redemptions can reduce funds available for cryptocurrency purchases.
Stablecoin supply expanded during the 2020–2021 cryptocurrency bull market before contracting following Terra’s collapse in 2022. That contraction coincided with an extended cryptocurrency downturn.
Bitcoin currently trades near $80,000, significantly below its October 2025 record of approximately $126,000.
Tokenized treasury market shrinks as Circle faces competition
Tokenized U.S. Treasury products also recorded declining valuations. RWA.xyz data showed their combined value falling from $16.2 billion on August 12 to $14.65 billion on October 25.
The $1.55 billion decline affected products including BlackRock’s BUIDL and Ondo’s USDY. Investors can redeem these holdings and redirect funds toward stablecoins, cryptocurrencies, or traditional bank accounts.
Standard Chartered subsequently postponed its $2 trillion stablecoin market forecast from 2028 to 2030. Geoffrey Kendrick, the bank’s digital assets research head, attributed slowing supply growth to weak cryptocurrency markets.
Kendrick described the slowdown as cyclical, noting that stablecoin supply remained between $300 billion and $320 billion over the past year.
Meanwhile, Circle’s October 16 blog disclosed approximately $819 million in distribution payments and transaction costs during the first half of 2026. That represented roughly 59 cents per dollar of its $1.4 billion revenue.
The disclosure followed growing competition from Open USD, which launched on June 30. Its consortium offers free minting and redemption, allowing partners to retain reserve interest earnings after a small management fee.
