Key Highlights

  • Ether traded near USD 2,320 on October 26, about 3.3% below Friday's USD 2,399 level, after approximately USD 44 million of leveraged long positions were closed.
  • Over 30 days, USD 4.69 billion left USDC and reduced circulation to roughly USD 71.74 billion, accounting for about 80% of a USD 5.82 billion decline among 13 tracked tokens.
  • Strategy directed USD 193 million to buying back STRC, compared with the acquisition of 267 bitcoin for approximately USD 22 million during the disclosed period.
  • The stablecoin market stood at USD 300.36 billion after contracting USD 12.73 billion from its May 22 level, while a major corporate bitcoin buyer added fewer coins.

Why Does Ether Reflect Changes in Speculative Demand First?

ETHA (NASDAQ:ETHA) directly owns ether and follows its spot price. Ether was around USD 2,320 during Monday's October 26, 2026 Asian session, while bitcoin was near USD 80,200. Ether had finished Friday, October 23 about 0.6% higher at roughly USD 2,399. Comparing the two quotes gives a decline of approximately 3.3%. As prices weakened, leveraged ether longs worth about USD 44 million were liquidated. Oil above USD 100 and the possibility of additional Federal Reserve tightening were cited as pressure, and October was heading for a second consecutive annual loss.

Ether generally moves with greater sensitivity than bitcoin when appetite for risk changes. That higher beta makes the fund an early indicator of speculative cash. Network use also supports value, so upgrade delays can matter. Reports said progress on Glamsterdam, Ethereum's next planned update, had stalled. The interest-rate channel is direct: after the Federal Reserve moved its band to 3.75% to 4.00% on September 16, 2026, cash and government bonds paid more than tokens that generate no yield.

A move under recent lows could cause another liquidation sequence like bitcoin's weekend decline. A smaller stablecoin pool also means less idle exchange cash is immediately available for token purchases. A weak October removes the seasonal narrative known as Uptober that often encourages retail demand near year-end. Policy provides another risk because a hawkish October 28 press conference from Kevin Warsh would strengthen the argument for interest-bearing assets over ether.

How Does Declining USDC Supply Affect Circle's Economics?

Circle (NYSE:CRCL) issues USDC, which aims to maintain a one-dollar price through backing by cash and short-term government obligations. On Sunday, October 25, 2026, circulation was approximately USD 71.74 billion. Seven-day contraction was USD 878.72 million; over 30 days, the decrease reached USD 4.69 billion, or roughly 6.1% by direct calculation. Tether's USDT declined USD 1.29 billion during the month to USD 182.42 billion and held 60.74% of the market. PayPal (NASDAQ:PYPL) gained USD 239.53 million in PYUSD. Circle shares lost 0.82% on October 23.

Most Circle revenue comes from interest earned on the assets supporting USDC. Income therefore varies with both the balance in circulation and short-term rates. A 6.1% supply contraction reduces the interest-generating base even though September's increase raised the yield on each dollar. Partner and distribution expense also matters. The company reported in mid-October that USD 819 million of first-half 2026 USDC-related revenue went to partners and costs. Lower circulation may indicate less money waiting on exchanges, although users could instead be moving to yield-bearing instruments without leaving crypto entirely.

Continued redemptions while bitcoin remains near USD 80,000 are the first concern. Competition is the second because PYUSD and Falcon's USDf expanded during the month. Tokenized Treasury products also declined from USD 16.2 billion on August 12 to USD 14.65 billion. Policy rates are the third variable because reserve income changes with them. Circle releases third-quarter results on Wednesday, November 4, 2026; those figures cannot be known beforehand.

Why Did Strategy Direct More Capital to Preferred Shares?

Strategy (NASDAQ:MSTR) uses bitcoin as its principal asset and finances purchases with common equity, borrowing and preferred shares. Its October 19, 2026 filing disclosed that USD 22 million bought 267 bitcoin, implying roughly USD 82,400 per coin. During the same period, it spent USD 193 million repurchasing STRC, a perpetual preferred security with a variable dividend. That buyback was nearly nine times the bitcoin purchase. Strategy also expanded its authorized STRC repurchase program to USD 3 billion. Reported bitcoin holdings total 848,517.

Perpetual preferred securities have no maturity but require continuing cash dividends, making each issue a long-duration fixed obligation. Research estimates that preferred issuance funded approximately 136,000 bitcoin purchases since 2025, about 16% of holdings. Repurchasing STRC removes some of that obligation and supports the security's market price, which can preserve access to future issuance. The trade-off is a smaller immediate coin purchase. The conclusion that a major buyer supplied less market demand follows from the disclosed allocation and is not a stated corporate policy.

Lower bitcoin prices could make preferred dividends more difficult to finance without selling common shares or coins. Weaker preferred prices would make additional issuance more expensive and slow the treasury model. Interest rates matter because a December increase, assigned 71% to 80% odds, would lift the yield investors demand. Strategy reports on Thursday, October 29, 2026, with its call scheduled for 5 p.m. ET.

Which Events Can Show Whether Liquidity Is Stabilizing?

Several sources of new crypto demand are weakening together. Since May, the stablecoin pool has contracted by USD 12.73 billion, with USDC responsible for much of the fall. That reduces Circle's interest base and may leave less cash available for token purchases. Strategy favored retirement of preferred obligations over a larger bitcoin acquisition, even with total holdings reported at 848,517 coins. Ether, the higher-beta asset represented by ETHA, registered the shortfall through price. Rate-increase expectations raise the opportunity cost across all three channels. Stabilization would require stronger circulation, renewed corporate buying or lower rate pressure rather than improvement in only one measure. The mix also matters: cash can remain within crypto yet migrate from stablecoins into yield products, and corporate capital can support financing instruments without immediately reaching the spot token market.

The Federal Reserve decision arrives Wednesday, October 28. Strategy and Coinbase Global (NASDAQ:COIN) report with PCE and GDP on Thursday, October 29. Midterms follow Tuesday, November 3, and Circle reports Wednesday, November 4, 2026. Investors can compare stablecoin balances, preferred financing and token prices after those events. Supply measures and estimates can be revised. This material does not constitute investment advice.