The stablecoin market cap of the top 12 digital assets fell $2.24 billion in the ten-day January period, according to Santiment, showing a major withdrawal of on-chain buying power as investors bypass traditional ‘crypto sidelines’ to move capital into precious metals, with gold breaking $5,000/oz and silver above $110/oz.
Key Insights
- The stablecoin market cap of the top 12 digital assets fell by $2.24 billion in just ten days. This shows a major withdrawal of on-chain buying power.
- Investors are bypassing the usual “crypto sidelines” and moving capital directly into precious metals like gold and silver.
- The shrinking supply of stablecoins shows that traders are cashing out to fiat currency rather than waiting for a lower entry point to buy back into Bitcoin.
Sometimes, to check the health of the crypto market, analysts assess how the dollar-pegged stablecoins are performing. When these assets grow, it usually means that new money is flowing in. However, recent data from Santiment shows the opposite is happening right now. Santiment noted that over ten days this January, the stablecoin market cap for the top 12 tokens dropped by a staggering $2.24 billion.
This happened as Bitcoin experienced an 8% price slide, but the reaction from investors was different than in previous years.
Why the Stablecoin Market Cap Is Currently Shrinking
Santiment says that in a typical market correction, a drop in Bitcoin usually causes a rise in the supply of stablecoins. This represents “dry powder,” or capital that is sitting on the bench, and investors are keeping it ready to jump back into the game when the price looks right.
However, the latest numbers show that the benches are becoming empty. The falling stablecoin market cap indicates that investors are converting their digital dollars back into fiat or bank deposits.
📉 The combined marketcap of the top 12 stablecoins in crypto has declined by $2.24B in the past 10 days alone. This drop has coincided with a -8% drop in Bitcoin’s price. A few things to interpret from this:
🥇🥈 Capital is rotating into traditional safe havens like gold and… pic.twitter.com/jfk1NSGygA
— Santiment (@santimentfeed) January 26, 2026
The stablecoin market shows that investors are jumping ship. | source: X
This trend shows a more defensive posture among market players because rather than looking for the next big trade, many are de-risking their portfolios in response to the market’s current performance.
As such, without a robust supply of stablecoins sitting on exchanges, any attempt at a price rebound faces significant friction. To put things simply, there is generally less fuel available to drive the market back up.
The Flight to Gold and Silver
While the crypto market is in the middle of struggles, other safe havens are surging
Gold and silver recently broke into uncharted territory, and gold prices have pushed past $5,000 per ounce. On the other hand, silver has seen even more aggressive gains after climbing above $110 per ounce. This divergence, where crypto falls and precious metals soar, indicates that a classic “flight to quality” is currently going on.
Investors are now reaching for assets with centuries of proven stability rather than the “digital gold” alternative. As such, the gap between precious metals and crypto is widening because gold is holding on to its role as an offshore hard currency.
Read More: Is Bitcoin Digital Gold or a Global Currency? Understanding Its Dual Role in Modern Finance
The Pressure on Altcoins
The loss of $2.24 billion in liquidity is especially harsh for the altcoin market.
Normally in the crypto market, speculative capital flows freely into smaller-cap projects. However, when the stablecoin market cap drops, the “water level” falls for the entire industry. When this happens, smaller boats (the altcoins) are the first to hit the rock bottom.
Normally, Bitcoin tends to benefit from its status of being the most stable cryptocurrency, and its market dominance tends to rise during these periods as investors move away from riskier altcoins.
However, the lack of stablecoin growth has been a ceiling for the whole sector, and for altcoins to see a meaningful comeback, the ecosystem needs new liquidity.
What a Real Crypto Recovery Looks Like
Historically speaking, price jumps almost always start with a rise in the stablecoin market cap.
Before Bitcoin makes its next major move up, investors typically see the supply of tokens like USDT and USDC stabilize and then begin to trend upward again.
This growth shows that new money is being wired into the ecosystem from the outside world and that investors feel safe enough to keep their dollars on-chain.
With this being said,
Until the bleeding in the stablecoin supply stops, the market may continue its “cautious consolidation” phase.
Disclaimer: This article is intended solely for informational purposes and should not be construed as financial advice. Investing in cryptocurrencies involves substantial risk, including the possible loss of your capital. Readers are encouraged to perform their own research and seek guidance from a licensed financial advisor before making any investment decisions. Voice of Crypto does not endorse or promote any specific cryptocurrency, investment product, or trading strategy mentioned in this article.
