Stablecoin Liquidity Contraction: Impact on Short-Term Purchasing Power and Future Trends

Stablecoin Liquidity Contraction: Decline in Short-Term Market Power

Recent analysis highlights a major shift in the stablecoin market due to regulatory uncertainty. The proposed GENIUS Act could ban interest-bearing stablecoins, prompting investors to seek alternatives like tokenized money market funds.

• USDC has seen net outflows of $6.5 billion over the last six weeks, signaling reduced liquidity.
• Short-term purchasing power in crypto markets has weakened as users look for yield elsewhere.

Capital Flows and Emerging Trends

With stablecoins losing traction, investors are moving funds into traditional safe-haven assets like gold and silver, further reducing stablecoin supply. To adapt, major players are focusing more on transaction activity rather than market capitalization, exploring real-world use cases through strategic partnerships and payment networks.