Billions in dollar-pegged tokens are quietly leaving crypto, yet Ethereum has barely flinched. Two earlier supply drains ended very differently for ETH, and the gap between them holds a warning for anyone assuming this calm will last.
The Crypto Desk desk. Editor: Sam Daodu.
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Stablecoin supply fell by about $5 billion at the end of this week. According to Sentora’s weekly tracker, supply declined every day of that week. DefiLlama puts the total at $293.25 billion, down from $298.24 billion the previous week and $293.86 billion a day earlier. That’s a weekly decrease of $4.99 billion, or 1.7%.
Sentora reported a bigger drop of $6.02 billion, bringing its total to $293.69 billion on November 6, because the two trackers measure supply differently.
Despite the pullback, Ethereum (CRYPTO:ETH) has barely moved. ETH trades at $2,232, a mere 1% drop over the past week, even though Ethereum hosts the majority of the decentralized apps those funds feed. So is the drop in stablecoins an early warning for ETH investors, or is it less concerning than it appears?
Why Stablecoin Supply Works as Ethereum’s Demand Gauge
Stablecoins are cryptocurrencies pegged to the U.S. dollar. When issuers create new tokens against fresh dollars, supply increases. Conversely, when holders redeem tokens, supply decreases, which is recorded as a “burn.” Traders consider total supply as crypto’s buying power, since these tokens are already on the blockchain and can purchase ETH without a bank transfer. Therefore, a shrinking supply can signal that money is returning to banks.
Ethereum is especially affected because it holds the largest share of money in decentralized finance (DeFi), the lending and trading applications built on blockchains. According to DefiLlama, Ethereum holds $43.51 billion of the $81.23 billion in value locked in DeFi, a substantial 53.6% share.
Circle’s data on Ethereum points the same way. A DefiLlama Research report from November 6 shows that over the past month, Circle minted $24.3 billion of USD Coin (CRYPTO:USDC) on Ethereum but burned about $27.4 billion, a net drop of $3.1 billion. Circle minted more coins than it burned on only 8 of 31 days, so its customers pulled dollars off Ethereum on most days.
Who Drove the $5 Billion Decline, and What the Chain Can’t See
The decline was uneven. Tether (CRYPTO:USDT) dropped from $177.50 billion to $176.78 billion in a single day. Sky Dollar (CRYPTO:USDS), designed for DeFi savings, fell from $6.48 billion to $5.59 billion the same day, suggesting DeFi users pulled money from savings. Ethena USDe (CRYPTO:USDE), a synthetic dollar earning yield from crypto futures, grew from $4.56 billion to $4.92 billion, so some traders still seek yield.
Burns also often come from routine activity by large players, such as market makers redeeming unused cash or funds moving money into Treasury bills. Circle’s 143,812 mint events mostly reflect institutional trading and say little about who is buying ETH. Other chains are also attracting new money. Whale Alert reported 250 million USDC ($250 million) minted on Solana on November 6, so Ethereum could lose share even when total supply rises.
The biggest blind spot is the exchange order book. Much of the buying happens within exchanges and never appears on the blockchain. When a stablecoin is spent on ETH within an exchange, it stays in circulation but changes hands, so supply data looks the same whether holders swap dollars for ETH or do nothing at all.
DeFi borrowers are also reducing their leverage. Sentora shows high-risk loans down $123 million to $5.95 billion, and its broader measure of DeFi total value locked down $861 million to $112.44 billion. Fewer risky loans can mean fewer forced sellers if ETH’s price dips again.
What Historical Trends Say About ETH and Stablecoin Declines
Stablecoin supply has declined sharply twice in the past year. The first lasted from December 2025 to February 2026. ETH closed at $2,970 on December 31, 2025, and rebounded to $3,352 by January 14, 2026. However, that rally faded while supply continued to shrink, and ETH closed at $2,143 on February 4.
The second drop came in June 2026, the largest monthly decline in stablecoins since the Terra-Luna collapse. ETH plummeted to a one-year low of $1,566 on June 25, and reports as late as July 20 showed supply still falling. ETH then rose to $2,775 by September 21, as layer-2 tokens rallied, showing that price can turn before the supply data does, but only after a deep washout.
The money that moves ETH is flowing out. U.S. spot Ethereum ETFs lost $365.3 million in the week ending November 6, and only four sessions since October 8 showed inflows. Cumulative net inflows fell from $13.32 billion to $11.92 billion during that period.
Stock investors have turned cautious, too. The VIX, a measure of expected stock market volatility, surged from 16.61 to 28.18 on November 5, and funds tend to cut exposure to volatile assets like ETH when it spikes. Crypto sentiment had already shifted toward fear in October.
Can Ethereum Rally While Money Leaves Crypto?
ETH might see a small recovery, but we don’t expect a lasting rally as long as stablecoin supply keeps shrinking. Over the past 30 days, ETH has dropped 9.7% and trades below its 30-day low close of $2,236, so this calm may only be a pause. The January 2026 rebound shows how a rally without fresh capital can fade, while the June 2026 low shows ETH can turn once selling pressure eases.
The first test is whether new money returns, with DefiLlama’s stablecoin supply back above $298.24 billion and a full week of net ETF inflows. The second is price. ETH would need to close above its 20-day average near $2,333, then its 50-day average at $2,499. If it drops below its 200-day average at $2,156 while supply keeps falling, January 2026 could repeat. Our Ethereum price prediction for 2030 covers the longer view.
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Sam Daodu is a crypto analyst and the editor of 24/7 Wall St.'s Crypto Desk, where he covers Bitcoin, XRP, Ethereum, Solana and the altcoins investors search for most. His work focuses on price levels, spot ETF flows, on-chain data and the regulatory decisions that move crypto markets, written so a first-time buyer and a seasoned trader can both use it.
Sam has written about crypto professionally since 2019 and has published more than 2,000 articles. Before joining 24/7 Wall St., he wrote for crypto media outlets and Web3 companies and ghostwrote for crypto founders and token launches. His analysis is syndicated on Yahoo Finance, MSN and AOL and has been cited by other crypto news sites. He also founded MacLabs Marketing, a content and personal branding agency for crypto founders and executives.
When he isn't reading charts, Sam is usually at the gym or watching One Piece, a series he maintains has better tokenomics than most altcoins.
