Tether (USDT), the world’s largest stablecoin, has experienced its biggest supply decrease to date, with its market capitalization dropping by $6.6 billion over the past two months. Blockchain analytics provider CryptoQuant reported that this decline represents the steepest drop since the company began tracking stablecoin metrics in 2022.
Stablecoin supply sees sharp contraction
USDT is designed to remain pegged to $1, so its price typically shows little movement. However, changes in the number of tokens in circulation highlight the broader market activity surrounding stablecoins.
The latest data reveal that the $6.6 billion decrease is more than twice the $3.2 billion drop recorded in the aftermath of the FTX exchange collapse. This decline suggests that investors are not simply holding stablecoins on the sidelines but are instead withdrawing funds entirely, reducing liquidity across digital asset markets.
CryptoQuant’s research indicates that investors are pulling capital from stablecoins, rather than simply waiting in USDT to buy other digital assets at a later date.
Overall, the total value of all stablecoins in circulation currently stands at approximately $290 billion. Traders and institutions frequently use stablecoins as a bridge to enter or exit the cryptocurrency markets, treating them as liquid proxies for fiat currencies.
With a shrinking stablecoin supply, there is less capital available on exchanges to support new crypto purchases or to fuel potential price recoveries. The report coincided with a period where Bitcoin (BTC) demand also cooled, falling by an estimated 284,000 BTC over 30 days.
If fresh capital does not enter the stablecoin market, it may become challenging for buyers to sustain rallies in major cryptocurrencies during this phase.
| Event | USDT Supply Drop | Total Stablecoin Value | BTC Demand Change (30d) |
|---|---|---|---|
| Current (Nov 2026) | $6.6 billion | $290 billion | -284,000 BTC |
| FTX Collapse (2022) | $3.2 billion | Not specified | Not specified |
Major banks launch Project Faro stablecoin initiative
Amid this contraction in stablecoin supply, a consortium of leading banks has announced a new initiative to develop their own stablecoin. Project Faro, backed by 21 major financial institutions, has raised $270 million to fund operations for the next five years, according to Bloomberg.
The group includes global institutions such as Goldman Sachs, Citi, Santander, and Deutsche Bank. Project Faro plans to launch a dollar-backed stablecoin in the first half of 2027, with a euro-pegged version expected to follow.
The project aims to improve cross-border payments for multinational corporates, offering quicker and more direct transfers between countries. One of its primary goals is to bypass traditional, slower banking settlement systems using programmable digital tokens.
Mini dictionary: Project Faro is a new joint venture by 21 international banks intended to create regulated, bank-issued stablecoins for institutional payments, with an initial focus on dollar- and euro-backed tokens for faster cross-border settlement.
Currently, Tether and Circle, issuers of USDT and USDC respectively, control approximately 85% of the stablecoin market, presenting significant competition. Project Faro’s challenge will be building the necessary user base and liquidity for its upcoming tokens. As of now, the project has not introduced a public token.
Backers including Deutsche Bank, Citi, Santander, and Goldman Sachs have committed five years of funding to ensure Project Faro’s development, with the dollar stablecoin scheduled for release in the first half of 2027.
With the funding secured, Project Faro’s focus will likely turn toward regulatory approvals and the technical infrastructure needed to compete with existing industry leaders. The euro-backed stablecoin is expected to follow after the launch of the dollar version.
