The supply of yielding stablecoins fell by more than $3.5 billion in the second quarter of 2026, reversing nearly three years of quarterly growth as crypto products declined and treasury-backed tokens rose.
CEX.IO cryptocurrency exchange reported As of Thursday, the category was down 15% in the second quarter. SUSDe Etheny lost 52% of its supply, losing almost $2 billion, while sUSDS Sky fell 16%.
Treasury-backed products moved in the opposite direction. BlackRock’s BUIDL index rose 2%, USYC Circle rose almost 16% and Ondo Finance’s USDY rose more than 66%, highlighting the widening divide between cryptocurrency yielding assets and time-honored asset-based products.
The divergence emerged as the broader stablecoin market posted its first quarterly decline since the third quarter of 2023, according to CEX.io. Total supply fell to $312 billion in the second quarter, while adjusted transaction volume fell 5.5%.
Supply growth per quarter, CEX.io summary. Source: CEX.io
The stablecoin slowdown deepens following weaker signals from the first quarter
The decline in the second quarter marks a keen reversal since the beginning of 2026. In the first quarter, stablecoin supply increased by approximately $8 billion to a record $315 billion, with yield products being the main drivers of the growth.
However, signs of weakening organic demand appeared already at the beginning of the year. In the first quarter, retail transfers declined by 16%, while automated activity accounted for approximately 76% of stablecoin transaction volume.
The slowdown continued throughout the second quarter. According to CEX.io, the total number of stablecoin transactions fell by 530 million to 4.48 billion, the largest quarterly decline on record. However, transfers under $250 rose 5% to $19.39 billion, suggesting that smaller peer-to-peer payments were more resilient than larger automated and trade flows.
Related: Financial firms team up for dollar stablecoin, preserving reserve profits
The decline occurs due to weaker activity on the cryptocurrency market
The decline in stablecoins also adds to broader concerns about weakening activity in cryptocurrency markets. On Wednesday, institutional data provider Talos identified falling stablecoin supply along with Bitcoin (BTC) outflows from exchange-traded funds (ETFs) and slower Bitcoin purchases by Strategy as three key demand channels that weakened in the second quarter.
Tanay Ved, senior research fellow at Talos, told Cointelegraph that the recovery in stablecoin supply will signal “the return of fresh capital to the ecosystem on a broader basis” and aid maintain onchain liquidity.
Ved said spot fund flows in the ETF market remain the most critical demand channel to watch because they tend to reflect longer-lasting changes in institutional appetite. However, he added that ETF flows, corporate Bitcoin purchases and stablecoin supply often go hand in hand when market dynamics change.
