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Total stablecoin market capitalization decreased by $2.19 billion during the week ending October 25, according to a weekly report from on-chain analytics firm Lookonchain. This contraction in supply occurred as traders prepared for interest rate decisions from the Federal Reserve on October 28 and the Bank of Japan (BoJ) on October 30.
On-Chain Liquidity and Volume Declines
The reduction in stablecoin supply was most pronounced on major networks. On Ethereum, combined balances of Tether (USDT) and USD Coin (USDC) fell by $1.17 billion over the seven-day period. Tron (TRX) recorded the second-largest outflow among the top 15 chains, losing $495 million in stablecoin value. In contrast, the Arc network posted the largest gain, adding $294 million to its stablecoin reserves.
Trading activity on decentralized exchanges (DEXs) slowed during the same timeframe. Spot volume on DEXs dropped 12.21% from the previous week to a total of $44.09 billion. Perpetual futures volume declined by 8.59%, reaching $142.54 billion. Hyperliquid, ranked as the top perpetual DEX by Lookonchain, saw its volume slide 8.50% to $51.68 billion. The platform’s weekly revenue fell 10.17%, and USDT and USDC balances on the Hyperliquid chain decreased by $184 million.
Corporate accumulation continued despite the cooling on-chain activity. Strive purchased 6,182 Bitcoin (BTC), increasing its total holdings to 43,000 BTC. BitMine added 10,452 ETH to its portfolio, a position valued at $24.13 million.
Central Bank Expectations and Market Pricing
Market participants expect both central banks to hold their current interest rates steady. CME Group’s FedWatch tool indicates an 89.5% probability that the Federal Reserve will maintain its rate range at 3.75% to 4% at the October 28 meeting. However, the same tool prices an 82.3% chance of a rate hike on December 9. The odds of no change in December have shifted, rising from 7.3% a month ago to 17.7% currently. Fed Chair Kevin Warsh is scheduled to hold a press conference on Wednesday following the decision, where guidance on the December path may be clarified.
The Bank of Japan faces a similar setup on October 30. A hold at the current rate of 1.25% is expected following a hike in September. More than 80% of economists in a Bloomberg survey anticipate the BoJ’s next move will occur in December. Daiwa Securities noted that a formal determination that underlying inflation has hit 2% could facilitate a December hike. BoJ Governor Kazuo Ueda is expected to speak on Friday, with traders monitoring his wording for hints regarding future policy actions.
Bitcoin Price Context and Precedents
Bitcoin is trading below $80,000, down 0.27% over the past day. The current setup offers a precedent from September, when the Federal Reserve hiked rates. During that event, Bitcoin rose from approximately $75,350 to above $76,100 within minutes. If a similar pattern holds, a priced-in hold may pass with minimal market disruption, while a firm signal regarding December hikes could weigh on prices. Stablecoin supply trends will indicate whether crypto buyers return to the market after Warsh and Ueda deliver their respective statements.
Frequently Asked Questions
How much did the stablecoin market cap change last week?
Total stablecoin market capitalization fell by $2.19 billion during the week from October 19 to 25.
What is the probability of a Federal Reserve rate hike in December?
CME Group’s FedWatch tool puts the odds of a December 9 hike at 82.3%.
