Stablecoin Market Cap Falls $10 Billion From May Peak, Long-Term Growth Seen Intact

The stablecoin market has shrunk by about $10 billion since its peak in May. Even so, the decline is not large enough to undermine the sector’s long-term growth trend, according to market participants.

CoinDesk reported on July 13 that total stablecoin market capitalization fell by $7.7 billion in June alone. It was the biggest monthly drop since May 2022, when the Terra-Luna collapse rattled the market.

RWA.xyz data show total stablecoin circulation has fallen by about $10 billion since the May high, a decline of roughly 3%. CoinDesk said that pullback remains limited compared with the 2022 bear market, when the stablecoin market shrank by more than 26%.

The decline was concentrated in Tether’s USDT and Circle’s USDC. USDT market capitalization fell to about $184 billion from $190 billion in May, while USDC dropped to about $73 billion from a peak near $80 billion in March.

Stablecoins are widely used as the base currency for crypto trading. Their use in payments and settlement is also growing, making supply changes a gauge of liquidity entering or leaving the digital-asset market.

Paul Howard, senior director at Wincent, said the recent decline in stablecoin market capitalization was a relatively small correction within what the firm still views as a long-term growth market.

Short-term liquidity swings are normal, he added, and do not change Wincent’s view that stablecoins will play an increasingly important role in the digital-asset ecosystem.

Shifts in the competitive landscape also appear to have contributed. As US regulation advances, including through the GENIUS Act, stablecoins are expanding beyond crypto trading into payments. New issuers are also entering the market.

While USDT and USDC supply declined, some smaller stablecoins grew. Global Dollar, or USDG, issued by Paxos and backed by a consortium that includes Robinhood, has surpassed $3.2 billion in circulation. USDGO, issued by Anchorage Digital and Hong Kong’s OSL Group, has nearly doubled to about $900 million.

CoinDesk said growth in stablecoin supply has historically accompanied bull markets. A decline in overall supply could weigh on liquidity in the crypto market, but the long-term growth trend may remain intact if new demand and competition among issuers continue.