Tether (USDT) experienced a significant market capitalization decline of $6.6 billion over the 60-day period ending November 7, according to CryptoQuant data. This represents the largest contraction in the stablecoin since the data tracking began in 2022, surpassing the $3.2 billion decline that followed the FTX collapse.
The contraction reflects broader trends in the stablecoin sector, where total capitalization has fallen to approximately $290 billion. Investor behavior suggests capital is being withdrawn from stablecoins rather than held for cryptocurrency trading purposes. Over a 30-day period, demand for Bitcoin decreased by approximately 284,000 BTC.
As stablecoin liquidity tightens, major financial institutions are positioning to enter the market. Project Faro, a joint stablecoin venture, has secured $270 million in funding from 21 major financial firms, including Goldman Sachs, Citi, Santander, and Deutsche Bank. The capital will support operations for five years leading up to the launch of a dollar-backed stablecoin in the first half of 2027, with a euro-backed stablecoin expected to follow.
Project Faro's entry into the stablecoin market faces substantial competitive barriers. Tether and Circle currently control roughly 85% of stablecoin supply, presenting challenges for adoption and liquidity development.
The project aims to facilitate cross-border transactions with dollar-backed stablecoins, potentially reducing reliance on traditional bank settlement periods. Multinational corporations could benefit from faster fund access and streamlined international payments.
The success of Project Faro will ultimately depend on how businesses adopt its payment features and integrate them into recurring transaction workflows.
