Stablecoins stood out as one of the few areas of strength in an otherwise muted cryptocurrency market during the first quarter, with both supply and transaction data indicating continued demand even as overall conditions weakened.

According to CEX.IO, total stablecoin supply rose by around $8 billion to reach a record $315 billion in Q1. Although this represented the slowest rate of growth since the fourth quarter of 2023, it still marked expansion during a period when the broader digital asset market declined.

The data suggests that investors increasingly turned to stablecoins as a defensive allocation, boosting their share of trading activity. During the quarter, stablecoins accounted for 75% of total crypto trading volume, the highest level recorded to date.

Transaction activity also remained elevated, with total stablecoin transfer volume surpassing $28 trillion. This continued a longer-term trend, with stablecoins now processing volumes that exceed those of traditional payment networks such as Visa and Mastercard.

Automation rises as retail activity declines

Despite the strong headline figures, underlying usage patterns showed a shift in market dynamics. Transfers typically associated with retail users fell by 16% during the quarter, marking the sharpest decline on record.

At the same time, automated activity increased significantly, with bots responsible for approximately 76% of all stablecoin transaction volume.

This shift indicates that a larger share of stablecoin usage is now driven by algorithmic trading strategies, arbitrage opportunities and liquidity provision rather than direct retail participation. While this can reflect greater institutional or professional involvement, it may also point to weaker organic demand during periods of market downturn.

Diverging trends among stablecoin issuers

The report also highlighted a growing divergence between leading stablecoin issuers. Circle’s USDC saw its supply increase by roughly $2 billion in the first quarter, while Tether’s USDt declined by about $3 billion. This marks the first significant divergence between the two since the second quarter of 2022, during the previous bear market. The trend aligns with earlier observations of rising USDC usage, particularly in trading and onchain financial operations.

Beyond USDC, much of the expansion in stablecoin issuance has been driven by yield-bearing products, a segment that is attracting increasing regulatory attention in the United States. Discussions around crypto market structure legislation have placed these products under scrutiny, with traditional financial institutions raising concerns about stablecoins offering interest-like returns.

The yield-bearing stablecoin segment is currently valued at approximately $3.7 billion, with daily trading volumes exceeding $100 million, according to CoinGecko data.

Sources:

https://cointelegraph.com/news/stablecoin-supply-315b-q1-usdc-rises-usdt-declines

https://www.coingecko.com/en/categories/yield-bearing-stablecoins

https://blog.cex.io/ecosystem/q1-2026-stablecoin-report-35459