The stablecoin market contracted by $10 billion since May, with $7.7 billion shed in June alone, according to research from CoinDesk. The June decline marks the largest monthly loss since May 2022, when the Terra-Luna collapse roiled crypto markets.
Market data tracked by DefiLlama shows the contraction occurred amid broader macro deleveraging in digital assets. Analysts do not characterize the retreat as a structural threat to stablecoin demand. One analyst quoted in the CoinDesk report said stablecoins are likely to resume long-term growth despite the near-term pullback.
The decline comes as institutional capital has shifted toward tokenized equities. Trading volumes in tokenized stocks reached record levels in recent weeks, driven partly by the prospect of a SpaceX initial public offering, according to CoinDesk's analysis. This reallocation suggests investor appetite for blockchain-based assets remains intact, even as stablecoin holdings have contracted.
Tether and USD Coin, the two largest stablecoins by market capitalization, have seen their combined dominance shift as institutional participants deploy capital across different protocols and asset classes. The June contraction was the steepest in two years by dollar amount.