Stablecoins & US Interest Rates
· Updated daily
As of Jun 2026, SOFR (Secured Overnight Financing Rate) stands at 3.60% — Fed cutting cycle. SOFR is held as the constant rate signal across this page; the stablecoin indicator it is compared against is selectable from six choices (market cap, velocity, USDT and USDC dominance, Supply Shock Index, and Issuer Theil Index). The colored regime bands mark distinct Fed policy periods since 2020. Each comparison surfaces a different rate-transmission channel: market cap captures the documented BIS-1068 (2023) supply-cycle response, velocity tests whether rate cuts shift stablecoins from idle collateral into active settlement, and dominance reveals whether USDC's T-bill-backed reserve structure makes it more rate-sensitive than USDT. SOFR is used because the Fed Funds Rate is a monthly series that produces a misleading staircase shape when overlaid on daily data.
Stablecoin Market Cap vs SOFR — Current Rate Environment
Total stablecoin market cap (left axis, green) with SOFR as secondary overlay (right axis, dashed red). Regime bands show the active policy period. Use the Compare against selector above to swap the left-axis indicator.
SOFR — Daily US Benchmark Rate, Full History
Daily SOFR from Jan 2020 to present with all four Fed policy regime bands. Use this chart to orient the current reading within the full rate cycle since 2020. SOFR replaced LIBOR as the primary US overnight benchmark in 2023.
The four regime boxes below describe how stablecoin market cap has moved through each Fed policy period — the most documented channel (BIS WP 1068, 2023). When you switch the Compare against selector, the chart updates and the underlying mechanism shifts: velocity tests transactional intensity; USDT vs USDC dominance separates offshore from institutional flows; the Supply Shock Index makes the regime-by-regime issuance flux explicit; Issuer Theil reveals concentration regime shifts. Use the 4-box framework as the rate-cycle backbone and switch comparisons to test which stablecoin indicator the rate signal is moving on a given day.
With SOFR near zero, risk-free alternatives yielded nothing. DeFi protocols offering 5–12% APY were substantially more attractive on a relative basis. Total stablecoin market cap grew from ~$6B to ~$180B during this period (BIS WP 1068, 2023).
For macro investors: Near-zero SOFR is the structural tailwind for on-chain yield. The carry trade into DeFi is most compelling when the risk-free rate is at or below inflation.
As SOFR rose from 0.05% to 5.3%, T-bill yields exceeded DeFi yields for the first time since 2018. Institutional capital rotated to money market funds. Total stablecoin market cap contracted from ~$180B to ~$130B — documented in BIS Working Paper 1068 (2023).
For CFOs and treasury teams: SOFR above ~4% has historically been the point at which T-bill allocation is unambiguously preferable to stablecoin DeFi yield on a risk-adjusted basis.
Despite SOFR remaining at its cycle high of ~5.3%, stablecoin supply stopped contracting and began recovering from its ~$130B trough. Markets were pricing in future cuts — consistent with capital responding to rate expectations ahead of actual policy moves.
For macro analysts: The supply recovery during still-elevated SOFR illustrates why rate direction and expectations matter as much as the current level. Forward rate curves are a better predictor of stablecoin inflows than the spot SOFR.
As the Fed began cutting rates in September 2024, stablecoin market cap resumed expansion reaching $305.8B. Declining SOFR compresses the yield advantage of T-bills, consistent with the documented rate-cycle transmission mechanism.
For macro investors: Rate-sensitive capital is returning to stablecoins. For DeFi risk teams: Inflow pressure increases leverage and collateral utilisation — monitor redemption pressure alongside this rate signal.
Rate series: SOFR (Secured Overnight Financing Rate), published daily by the Federal Reserve Bank of New York. Fetched from FRED (series ID: SOFR). Coverage: January 2020 – present. SOFR is denominated in percent per annum.
Regime bands: Set to actual FOMC meeting dates — not interpolated or estimated. The four regimes (zero-rate, hike cycle, high-rate pause, cutting cycle) correspond to documented FOMC policy decisions. The Fed Regime stat box reflects the current active regime. Bands are updated manually within one business day when the FOMC acts; the current cutting cycle remains open-ended until the next policy change.
Comparison indicators (left axis):
- Market Cap — daily sum of all tracked stablecoin market caps from CoinGecko snapshots (322 coins) plus extended history from DefiLlama. Coverage: Jan 2018 – present. The standard rate-transmission lens.
- Velocity — sum of daily on-chain trading volume (24h) divided by total market cap on the same day. Dimensionless ratio. Higher = more transactional use; lower = more passive collateral / yield holding.
- USDT Dominance — USDT market cap as percent of total stablecoin market cap. Captures the offshore / non-US share of dollar-stablecoin demand.
- USDC Dominance — USDC market cap as percent of total. Sensitive to rate cycles because Circle's reserves are T-bill heavy; institutional treasury teams move in and out as the carry vs T-bills shifts.
- Supply Shock Index (SSI) — rolling 30-day percent change in total stablecoin market cap. The flux signal — leading indicator for stress when negative under tightening, expansion under easing.
- Issuer Theil — Theil entropy of issuer market shares. Rises when issuance concentrates in fewer issuers. Tests whether rate cycles drive concentration changes.
Why not FEDFUNDS? The Federal Funds Rate is a monthly series. Displayed as a line, it produces a staircase shape that is visually misleading alongside daily SOFR and stablecoin data. The regime bands convey the same policy context without that distortion.
What this page does not prove: The correlations visible across regime bands describe co-movement, not causation. Stablecoin indicators are influenced by many drivers beyond US short-term rates (offshore demand, regulation, DeFi yield, EM dollarization). Use this page to test the rate-transmission hypothesis under each lens, not to attribute single causes.
Update frequency: Daily at ~15:30 UTC (SOFR published with a 1-business-day lag by FRED).