Stablecoin Market Hits Six-Month Low Amid $10 Billion Decline
The stablecoin market has experienced its worst stretch since the Terra implosion in 2022, with a total market capitalization decline of roughly $10 billion over the past 10 weeks.
This marks the first sustained contraction in the sector in four years and brings the market cap to a six-month low. The last time stablecoins saw such a significant decline was in May 2022, when the Terra/Luna collapse wiped out 26% of the market in just days.
The dominant force in stablecoin markets, USDT, shed about $6 billion in market cap during this period, dropping from around $190 billion in May to approximately $184 billion by late July. USDC declined from a March peak near $80 billion to roughly $74 billion over the same period.
One of the key explanations for the outflow points back to Washington and the GENIUS Act, which established a federal regulatory framework for payment stablecoins in July 2025. A prohibition on yields for payment stablecoins under this act treats them as payment instruments rather than investment vehicles.