Stablecoin Growth Slows: USDT, USDC Decline as PYUSD, RLUSD Gain Market Share

VADODARA, January 27, 2026 — The stablecoin market's expansion has decelerated since Q4 2025. This daily crypto analysis reveals a significant shift in liquidity dynamics. According to on-chain data from Sentora, formerly IntoTheBlock, month-over-month growth stalled. Tether's USDT and Circle's USDC market capitalizations declined. In contrast, PayPal's PYUSD and Ripple-affiliated RLUSD gained relative market share.

Investigation: The Stablecoin Liquidity Slowdown

Sentora's analysis identifies a clear trend. Stablecoin market growth slowed sharply after rapid expansion. The firm attributes this primarily to declines in USDT and USDC. These two giants dominate the sector. Their combined market share fell month-over-month. Newer entrants PYUSD and RLUSD expanded steadily. This indicates a structural shift in stablecoin adoption.

Market structure suggests a liquidity grab by newer players. The total stablecoin supply acts as a key on-chain liquidity metric. A slowdown pressures altcoin markets. It reduces available capital for trading and DeFi activities. Consequently, volatility may increase across crypto assets.

Market Context & Historical Precedent

Historically, stablecoin growth correlates with bull market cycles. The 2021 surge saw USDT and USDC lead expansion. Underlying this trend was massive institutional inflow. In contrast, the current slowdown aligns with broader market fear. The Crypto Fear & Greed Index sits at 29/100.

This mirrors patterns from late 2022. Then, stablecoin outflows preceded a deeper market correction. However, the rise of PYUSD and RLUSD breaks from past cycles. It reflects growing diversification in the stablecoin ecosystem. Regulatory clarity, such as the SEC's evolving stance on payment stablecoins, may be a factor.

Related Developments:

• Tether's recent launch of a U.S.-compliant stablecoin, USAT, signals strategic adaptation.
• OKX listing USAT/USDT pairs amid market fear highlights exchange liquidity strategies.
• Altcoin liquidity crises, like 1INCH's 7% plunge, underscore broader market stress.
• Arizona's move to exempt crypto from property tax shows regulatory tailwinds.

Technical Architecture & Price Action

Stablecoins are critical for on-chain settlement and liquidity. A slowdown in growth creates a Fair Value Gap (FVG) in market structure. Bitcoin's current price at $87,714 faces pressure. Key support lies at the Fibonacci 0.618 retracement level of $85,000. This level must hold to prevent a deeper liquidity crunch.

Volume Profile analysis shows thinning liquidity above $90,000. RSI on daily charts indicates neutral momentum. The 50-day moving average at $86,200 provides near-term support. A break below invalidates the current consolidation phase. Market analysts watch USDT and USDC redemptions closely. Large outflows could trigger a cascade sell-off in altcoins.

By The Numbers

Why It Matters

Stablecoins are the lifeblood of crypto markets. They facilitate trading, lending, and settlements. A growth slowdown tightens liquidity conditions. This impacts institutional strategies and retail participation. Reduced stablecoin supply often precedes market downturns. It limits capital available for leverage and speculation.

, the shift from USDT/USDC to PYUSD/RLUSD matters. It reflects competitive dynamics and regulatory adaptation. PayPal and Ripple bring established user bases. Their growth could reshape stablecoin dominance long-term. For traders, this means monitoring on-chain flows more closely. Liquidity shocks become more likely in thin markets.

Expert Commentary

"The stablecoin slowdown is a critical liquidity signal. Market structure suggests we are entering a consolidation phase. USDT and USDC declines indicate profit-taking or regulatory caution. Meanwhile, PYUSD and RLUSD growth shows innovation persists. Traders should watch Bitcoin's $85,000 level as a liquidity barometer." — CoinMarketBuzz Intelligence Desk

Market Outlook & Price Scenarios

Two data-backed scenarios emerge from current market structure.

• Bullish Invalidation Level: $92,000. A break above this resistance confirms renewed institutional inflow and stablecoin growth recovery, potentially driven by ETF approvals or macro tailwinds.
• Bearish Invalidation Level: $85,000. A break below this Fibonacci support indicates deepening liquidity crisis, likely triggering altcoin sell-offs and testing $80,000 as next support.

The 12-month outlook hinges on stablecoin adoption. If PYUSD and RLUSD continue gaining share, market diversification could stabilize growth. However, prolonged USDT/USDC declines may pressure overall liquidity. Institutional interest in Ethereum's upcoming Pectra upgrade and DeFi innovations could offset slowdowns. Over a 5-year horizon, regulatory clarity and technological advances will dictate stablecoin dominance.