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Stablecoin supply continued to decline over the past week as Bitcoin extended a pullback that began two weeks earlier. Data shows capital exiting the crypto system rather than rotating into defensive on-chain positions. The combined market value of the top 12 stablecoins fell by about $2.24 billion over 10 days, according to Santiment.
During the same period, Bitcoin dropped from $95,000 to $88,441, based on data from CoinGecko. Bitcoin later rebounded to $88,500, up 1.4% on the day, yet it remained down 4.2% over the week.
Santiment said declining stablecoin supply signals investors moving funds into fiat instead of preparing to buy market dips. The pattern suggests weaker near-term risk appetite across crypto markets.
Stablecoins function as the primary base currency for crypto trading and decentralized finance activity. Their aggregate supply often reflects how much capital remains positioned inside the digital asset system.
Santiment said past market recoveries began only after stablecoin market values stabilized and resumed growth. The recent contraction has coincided with limited activity across derivatives markets.
Bitcoin’s aggregated open interest stayed rangebound between 245,000 BTC and 267,000 BTC for several weeks, according to Velo data. That range suggests traders avoided adding leveraged exposure during the price decline.
The decline in stablecoin supply has weighed more heavily on altcoins. Santiment noted that smaller tokens depend more on speculative flows and thinner liquidity than Bitcoin. As a result, reduced stablecoin availability has constrained trading activity across broader crypto markets.
Investment products tied to digital assets also recorded heavy withdrawals. CoinShares reported roughly $1.73 billion in net outflows from crypto funds in a single week. Bitcoin and Ethereum exchange-traded funds led those withdrawals. At the same time, stablecoin issuer Tether increased exposure to physical gold.
The company acquired approximately 27 metric tonnes of gold during its operations in the fourth quarter of 2025. The move aligned with broader capital flows, which preferred hard assets instead of risk assets.
The combination of stablecoin contraction and fund outflows demonstrates a typical risk-off market condition. Market participants chose to decrease their exposure instead of making short-term rebound investment shifts. Financial sectors have historically benefited from defensive strategies during such conditions.
Two forces have shaped recent price action: macroeconomic stress and demand for traditional safe havens. Bitcoin has often struggled during periods of elevated geopolitical and policy uncertainty.
That pattern resurfaced during the current pullback from the October all-time high. Jordan Jefferson, founder of the Dogecoin app layer DogeOS, previously told Decrypt that Bitcoin tends to weaken during macro stress. He said the current trend aligns with that historical behavior.
Shifting geopolitics and policy uncertainties have driven the latest decline. Gold has attracted renewed attention during the same period. Tim Sun, senior researcher at HashKey Group, told Decrypt that gold benefits from long-term credibility and low volatility.
The metal reached a new record high of $5,100 per ounce this week. Sun said Bitcoin’s volatility limits its ability to absorb great safe-haven demand, raising a key question: when will stablecoin growth return and signal renewed confidence? Traders have remained cautious ahead of Wednesday’s Federal Reserve policy meeting.
Read More: Tether and Circle Mint $1.5 Billion in Stablecoins Amid Crypto Market Volatility
Markets expect the Federal Reserve to hold interest rates steady. Several Magnificent Seven technology companies are also set to report earnings. Trading volumes stayed muted as investors waited for a clearer direction across global markets.
Stablecoin supply has fallen alongside Bitcoin’s recent decline, signaling capital moving out of crypto rather than rotating internally. Fund outflows, muted derivatives activity, and rising gold exposure reflect a clear risk-off phase. Market participants may watch stablecoin growth for early signs of renewed confidence.
