Warning sign for crypto: stablecoins see historic weekly dip of $7 billion

Binance saw its largest weekly net outflow since November 2025, with over $6 billion exiting across BTC, ETH, and USDT.

The supply of stable coins on the Ethereum network fell by about $7 billion last week, from $162 billion to $155 billion, according to on-chain data shared by analyst Darkfost.

This move is notable because it marks the first sharp weekly contraction for the ERC-20 stablecoins during the current market cycle, adding to signs that liquidity in the crypto markets is waning as prices correct and capital shifts to other asset classes.

The supply of stablecoins decreases as capital leaves exchanges

Donkerfost wrote that a falling market cap for stablecoins usually means investors are converting digital dollars back into fiat, reducing demand for on-chain liquidity. When this happens, stablecoin issuers typically burn the excess supply, reducing overall capitalization.

The on-chain engineer described the trend as bearish, noting that similar behavior occurred in 2021, when Bitcoin entered a prolonged downturn, although that period also included the later collapse of Terra’s UST.

Other data points support the idea that capital is moving, rather than just rotating within crypto, with CryptoOnchain reporting that Binance recorded its largest weekly net outflows since November 2025. For the week beginning January 19, BTC saw approximately $1.97 billion in net outflows, Ethereum approximately $1.34 billion, and ERC-20 USDT approximately $3.11 billion. Combined, more than $6 billion left the stock market, spread across major assets.

But not every stablecoin flow pointed in the same direction. While Ethereum-based USDT exited Binance, USDT on Tron saw inflows of around $905 million, suggesting some investors are shifting networks rather than abandoning centralized platforms entirely.

Yet the fact that both risky assets and stablecoins disappeared from the market at the same time often aligns with periods of higher volatility rather than a clear price direction.

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The timing also overlaps with recent price weakness. Bitcoin fell below $88,000 on January 25, extending the pullback that started earlier this month and pushing weekly losses above 5%.

Liquidity pressure is accompanied by macro headwinds

There was also additional context from the Binance flow data shared by analyst Amr Taha over the weekend. He noted that the exchange’s USDT reserves fell from $9.16 billion on January 7 to $4.6 billion on January 24, a reduction of more than $4.5 billion in less than two weeks. During the same period, Bitcoin inflows into the exchange increased as prices briefly rebounded above $95,000, a pattern Taha linked to profit-taking rather than new risk appetite.

The market watcher also pointed to tightening conditions outside of crypto, with the U.S. Federal Reserve’s net liquidity falling by about $90 billion between Jan. 21 and 24, based on changes in Treasury and reverse repo balances. Historically, contractions in system-wide liquidity have weighed on risky assets, including digital currencies.

The short-term picture contrasts with longer-term expectations. In a January 1 post, a16z Crypto argued that stablecoins could eventually process payments on a scale comparable to global card networks. For now, however, the latest on-chain data suggests traders are pulling back on exposure, leaving the crypto markets with less immediate liquidity support.