Stablecoins see biggest drop since 2022 crypto winter led by Tether (USDT), Circle’s USDC decline
The market shrank by $7.7 billion in June alone, the largest dollar amount since May 2022’s Terra-Luna crash, but stablecoins will likely resume their long-term growth, one analyst said.
By Krisztian Sandor|Edited by Stephen Alpher
Jul 12, 2026, 1:00 p.m.
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Summary
The stablecoin market posted its biggest retreat in years in June, a sign that onchain liquidity has dwindled as crypto markets continued to consolidate near 2026 lows.
Last month saw a $7.7 billion decline in stablecoin market capitalization, the largest dollar amount since May 2022, when blockchain protocol Terra-Luna collapsed, kickstarting a brutal bear market often dubbed as crypto winter, CoinDesk Data reported.
Zooming out, the total value of stablecoins in circulation has fallen ny roughly roughly $10 billion since its May peak, according to data from RWA.xyz. It’s about a 3% drop on a percentage basis, the largest such downtrend since 2023, but well shy of 2022’s 26% collapse.
The decline has been driven mainly by the two dominant issuers. Tether’s USDT, the largest stablecoin, has seen its market capitalization fall to roughly $184 billion from $190 billion in May, a decline of about $6 billion. Circle’s USDC has dropped to around $73 billion from its March 2026 peak of just shy of $80 billion, shedding another $7 billion.
The setback is notable because it runs counter to the bullish outlooks of Wall Street banks on stablecoin growth. Last year, global bank Citi revised its stablecoin growth forecast for 2030 to $1.9 trillion in its base case and $4 trillion in a bull case, up from $1.6 trillion and $3.7 trillion, respectively. Standard Chartered projected a $2 trillion market by 2028.
The decline also carries broader relevance for the crypto market. Major stablecoins are widely used as the quote currency for crypto trading and increasingly for payments and settlement, making changes in their supply a closely watched gauge of liquidity flowing into or out of digital assets.
The pullback may seem dramatic, but it’s modest by historical standards.
A similar pullback occurred between December 2025 and February 2026, when stablecoin supply fell by roughly $9 billion before bouncing to a new record. That coincided with a major correction in cryptocurrencies, with bitcoin plunging from around $95,000 to $60,000.
Altogether, the stablecoin market has largely stalled around $300 billion since October (coinciding with bitcoin hitting its $126,000 record) after more than doubling in size in two years.
The 2022 bear market, marked by major implosions like crypto exchange FTX and lenders Celsius, BlockFi and Genesis, was far more severe for stablecoins.
The combined market capitalization of major stablecoins fell from roughly $166 billion in March 2022 to $122 billion by September 2023, RWA.xyz data shows — a decline of over 26% as investors pulled money from the digital asset market.
Tether’s USDT fell from $78 billion to $65 billion between March and November 2022. For USDC, the downtrend took much longer to play out, falling from $55 billion in July 2022 to below $24 billion by November 2023, exacerbated by its banking partner Silicon Valley Bank’s collapse in 2023 March.
The implosion of TerraUSD, the algorithmic stablecoin of the Terra-Luna crypto project, also wiped out $18 billion from the stablecoin market.
The current decline is only a temporary setback in a long-term uptrend, one analyst said.
“The recent decline in stablecoin market cap represents a relatively small pullback in what we believe is a long-term growth market,” said Paul Howard, senior director at trading firm Wincent.
“Short-term fluctuations in liquidity are normal, but they don’t change our view that stablecoins will continue to play an increasingly important role in the digital asset ecosystem,” he added.
Looking beyond the headline decline, the trend appears more nuanced.
Part of the slowdown reflects a changing competitive landscape. As stablecoins move beyond crypto trading and into mainstream payments, new issuers have entered the market following regulatory progress such as the GENIUS Act in the U.S.
While Tether’s USDT and Circle’s USDC have both seen supply decline recently, several smaller competitors have expanded. Global Dollar (USDG), issued by Paxos and backed by a consortium including Robinhood, surpassed $3.2 billion in circulation, while USDGO, issued by Anchorage Digital with Hong Kong’s OSL Group, nearly doubled to $900 million, CoinGecko data shows.
More competition is on the way, too. OpenUSD, backed by a group of payments and financial firms, is among several newcomers looking to challenge the dominance of USDT and USDC.
Even so, stablecoin growth has historically coincided with bull markets by providing fresh onchain buying power. Shrinking aggregate supply removes a tailwind for crypto markets, making it harder for cryptocurrencies to sustain rallies unless new demand emerges.
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Digital assets posted a third consecutive quarter of losses in Q2 2026, the longest losing streak since the 2022 bear market, as institutional capital rotated into AI equities and Bitcoin ETFs recorded their largest quarterly outflow since launch. Our report examines what drove the divergence, where structural adoption continued regardless, and what Q3 signals to watch.
Why it matters:
Digital assets posted a third consecutive quarter of losses in Q2 2026, the longest losing streak since the 2022 bear market, as institutional capital rotated into AI equities and Bitcoin ETFs recorded their largest quarterly outflow since launch. Our report examines what drove the divergence, where structural adoption continued regardless, and what Q3 signals to watch.