Crypto’s Dry Powder Is Drying up as Stablecoin Sector Contracts by $9.4B

Stablecoin Supply Has Fallen by $9.445 Billion Since May 8, Trimming Dry Powder Across Crypto Markets

Since May 8, 2026, the stablecoin sector has contracted by $9.445 billion over a 51-day stretch. A declining stablecoin market capitalization is widely viewed as a bearish indicator because it signals more than traders remaining on the sidelines; it suggests capital, or “dry powder,” is actively flowing out of the market.

Seven-day data show the market recorded $2.119 billion in outflows over the past week, with declines spread across USDT, USDC, USD1, USDe, and PYUSD, according to defillama.com statistics.

The stablecoin sector now stands at $313.191 billion, with USDT commanding a $184.898 billion market capitalization, giving it a 59.04% share of the entire market.

Tether’s USDT and Circle’s USDC Accounted for Most of the Recent Outflows

The bulk of the stablecoin outflows occurred during the past 30 days, with tether ( USDT) shrinking by $3.79 billion since May 28. Circle‘s USDC recorded a $2.419 billion decline, while Sky’s USDS posted a $587 million reduction. Sky’s DAI, on the other hand, bucked the trend by posting a $251 million increase, climbing 5.48% since May 28.

Since May 28, about $69 million has flowed out of World Liberty Financial’s USD1, trimming its supply by 1.45%, while Ethena’s USDe declined 0.69%, or just over $31 million, during the same period. As the total stablecoin supply contracts, the pool of available buying power capable of absorbing selling pressure also diminishes, and this latest stablecoin drawdown has unfolded alongside the broader crypto market decline.

Treasury-Backed Tokens Decline in Tandem

A similar pattern has emerged in the real-world asset ( RWA) sector, particularly among tokens backed by U.S. Treasuries, according to rwa.xyz metrics. During June, the tokenized U.S. Treasuries market declined from $15.86 billion to the current $14.59 billion, and since May 28, it has surrendered 2.58% of its total value. Taken together, the contraction across stablecoins and tokenized Treasury products points to a broader rotation of capital and a meaningful retreat from the market.

How long that trend persists is anyone’s guess.