Stablecoin supply drops a record $11.5 billion in 30 days as Fed hike bets grow
USDT, USDC and DAI supply shrank by a record $11.5 billion in a month, leaving less cash to buy crypto dips as traders bet on a December Fed rate hike.
The pool of dollar stablecoins that usually fuels crypto buying is shrinking fast. The combined supply of USDT, USDC and DAI fell by about $11.5 billion over the past 30 days — the biggest drop on record, according to Coinbase Institutional data.
What happened
- Less dry powder. Stablecoins are the cash traders keep on exchanges. When supply shrinks, there is less money ready to buy when prices fall, Coinbase Institutional noted.
- The Fed is the main driver. Coinbase's weekly analysis linked the crypto slide mainly to rate expectations after October jobs and inflation data came in hotter than forecast. Consumer prices rose 0.4% in October versus 0.3% expected.
- A hike is now the base case. CME FedWatch showed about an 88.5% chance of a quarter-point rate rise at the December meeting, from a current range of 3.75%–4%.
- Losses on paper. Bitcoin holders were sitting on about $12.7 billion of unrealized losses, per the same analysis.
Why it matters for regular investors
Higher rates make cash and bonds more attractive and tend to weigh on riskier assets like crypto. Bitcoin trades at $64,540.40 and ether at $1,811.93, both far below their records — see the gap on our from-ATH page. See what inflation does to cash savings on our inflation calculator.
A regular buyer doesn't need to guess the Fed's next move. Someone who put $10 a day into bitcoin for the last 5 years has invested $18,410 and now holds $27,439 (+49.0%). Past results do not predict future ones. Compare with stocks and gold in the DCA calculator.
Sources
- CryptoTicker — Bitcoin falls on Fed hike bets, $1.07bn ETF outflows and a record stablecoin drop
- TokenPost — Coinbase Institutional ties bitcoin's drop to Fed bets
Not investment advice.