Stablecoin Drain, ETF Outflows Leave Bitcoin 'Running on Empty'

The pool of dollars that fuels crypto trading is draining.

Total stablecoin supply fell by $14.2 billion over the 30 days through Nov. 9, the fastest contraction since June 2022, according to a report published Wednesday by onchain analytics firm Glassnode.

The total stablecoin supply now sits just below $280 billion, and the research company suggests that's a big reason why Bitcoin is currently "running on empty."



Stablecoins, tokens typically pegged to the U.S. dollar, serve as crypto’s cash. Traders park money in them on exchanges and onchain before buying other assets.

When the stablecoin supply shrinks, it means holders are redeeming tokens for dollars and pulling that money out of crypto entirely, which Glassnode said leaves “less fuel for a rally.” The firm said a return to supply growth would be the first sign that fresh money is coming in.

The stablecoin drain isn’t the only sign of money leaving. U.S. spot Bitcoin ETFs saw about $1.6 billion in net redemptions over 20 trading sessions, the report found, and Bitcoin has traded at a discount on Coinbase, a gauge of U.S. demand.

Bitcoin also slipped below the average cost basis of short-term holders, about $75,600, leaving most recent buyers underwater, and traded near $73,000 on Wednesday. Over $3.6 billion in Bitcoin was recently moved over to exchanges, potentially to be sold, at a loss, according to a separate report from CryptoQuant today.

Glassnode did point to some silver linings. The slide has flushed out most leveraged long positions near the current price, buy orders outweigh sell orders in the order book, and wallets holding between 100 and 10,000 BTC have started accumulating.

Bitcoin Short-Term Holders Send $3.6 Billion in BTC to Exchanges at a Loss

The firm flagged $73,000 as key support and said the broader trend change that began in August remains intact as long as Bitcoin holds above its June low.

The contraction comes as stablecoins face growing competition from traditional finance.

Global banks including Goldman Sachs, Citi, and Deutsche Bank are backing a $270 million challenge to crypto’s dominant stablecoin issuers, and the Federal Reserve recently unveiled stablecoin rules on reserves and capital.