Stablecoin Drain, ETF Outflows Leave Bitcoin 'Running on Empty'
Total stablecoin supply fell by $14.2 billion over 30 days through Nov. 9, the fastest drop since June 2022, while U.S. spot Bitcoin ETFs saw about $1.6 billion in net redemptions.
The total stablecoin supply now sits just below $280 billion, according to onchain analytics firm Glassnode. This contraction leaves "less fuel for a rally" in the crypto market, as stablecoins serve as crypto's cash that traders use to buy other assets.
The outflows aren't limited to stablecoins. U.S. spot Bitcoin ETFs have seen about $1.6 billion in net redemptions over 20 trading sessions, and Bitcoin has traded at a discount on Coinbase, indicating reduced U.S. demand.
Bitcoin Price Pressure
Bitcoin has slipped below the average cost basis of short-term holders, about $75,600, leaving most recent buyers underwater. The cryptocurrency traded near $73,000 on Wednesday, with over $3.6 billion in Bitcoin recently moved to exchanges, potentially to be sold at a loss.
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.
Bank Competition
The stablecoin contraction comes as traditional finance increasingly competes with crypto's dominant stablecoin issuers. Global banks including Goldman Sachs, Citi, and Deutsche Bank are backing a $270 million challenge to crypto's stablecoin market.
The Federal Reserve has also recently unveiled stablecoin rules on reserves and capital, further tightening the regulatory environment for digital assets pegged to the U.S. dollar.
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