This week saw the first massive contraction in stablecoin supply in years, according to new analysis from blockchain analytics firm Glassnode. Since March 2020, the total supply of major stablecoins (USDT, USDC, BUSD, and DAI) has increased from $5.33 billion to over $158.25 billion. This is an astonishing increase of 2866% in just over two years.
USDT remains the dominant asset with 52.6% of the main supply, followed by USDC with 30.8% dominance. However, the total stablecoin supply has shrunk by $3.285 billion since the beginning of April. When shrinking, the total stablecoin supply was at $161.53 billion. Most stablecoin redemptions are driven by USDC, which has lost $4.77 billion since the beginning of March.
On the other hand, the supply of USDT continued to expand, adding $2.5 billion over the same period. This recent stablecoin supply contraction is a rare event, with total supply shrinking at a rate of -$2.9 billion per month. USDC is the major stablecoin asset experiencing redemptions, which heralds some degree of net capital outflow across the cryptocurrency industry.