Stablecoin supply declined in recent months, and rising U.S. Treasury bond yields are to blame, according to Re7 Capital.
Re7 said stablecoin growth has historically been sensitive to the returns investors can earn onchain compared with U.S. government debt. With the 10-year Treasury yield pushing toward 5%, DeFi has a tougher time competing for capital.
Stablecoin market capitalization is showing that dynamic: It has fallen about $10 billion since May, according to CoinDesk data, with July showing the largest monthly decline since 2022.
The same relationship worked in crypto’s favor after the 10-year yield peaked near 5% in October 2023 and started falling. Stablecoin supply began a sustained expansion soon after.
Now, inflation concerns tied to the Iran conflict have pushed yields higher again and stablecoin growth has stalled.
Re7 says it expects that pressure to ease if Treasury yields retreat. Lower yields would make DeFi returns more competitive again, potentially drawing liquidity back onchain and restarting stablecoin growth.#U.S.UnemploymentNewLow $XRP
