# Bank Deposit Rates Linked to 2.8-Percentage-Point Drop in 10-Week Stablecoin Growth By John Kim Canonical URL: https://www.tokenpost.com/news/business/34069 Published: 2026-10-17T14:58:36.000Z Updated: 2026-10-17T14:58:36.000Z Section: Business > A one-basis-point increase corresponds to 0.01 percentage point. The baseline estimate implies growth falling from 15% to about 12%, while an alternative model puts the 10-week figure near 6%. Higher U.S. bank deposit rates were associated with slower growth in reserve-backed stablecoins, with a one-basis-point increase linked to a 2.8-percentage-point reduction over 10 weeks, sharpening comparisons with deposits that can pay interest. The estimate draws on 339 weekly U.S. observations from January 2019 through June 2025. A one-basis-point move equals 0.01 percentage point. The baseline model links that change in average deposit rates to 2.8 percentage points less cumulative market-cap growth over 10 weeks. Against the 15% average growth rate in the sample, the result implies roughly 12% growth. A second method, using an instrumental variable, produces a larger 9.1-percentage-point reduction and an implied 10-week growth rate near 6%, versus 15%. Its first-stage F-statistic, a measure used to assess the instrument’s strength, was 9.78, just under the conventional threshold of 10. The estimates vary by issuer. For each one-basis-point rise in deposit rates, 10-week growth was associated with a decline of about five percentage points for Circle’s USDC and two percentage points for Tether’s USDT. The greater estimate for USDC was linked to its heavier use among U.S. institutional and decentralized finance users. Reserve-backed stablecoin market capitalization started below $5 billion in 2019 and exceeded $220 billion by mid-2025. The measure covers the combined capitalization of reserve-backed tokens, including USDT, USDC and other stablecoins, rather than tracking any particular depositor’s decision to move cash. That distinction limits what the results establish. Because the analysis observes aggregate stablecoin market capitalization, it cannot show whether individual holders shifted funds from bank accounts or whether total deposits or bank lending declined. The estimates add detail to [earlier coverage of deposit rates and stablecoin growth](). The dataset also captures one high-rate episode, from 2022 through 2025, during which stablecoins generally did not pay interest. Bank deposits, by contrast, can offer interest, giving consumers a potential financial reason to compare the two, though the analysis measures growth and not individual choices. Researchers Rashad Ahmed and Iñaki Aldasoro wrote, “Banks retain some influence over the pace of that adoption through deposit pricing.” ## Links in this article - [earlier coverage of deposit rates and stablecoin growth](https://www.tokenpost.com/news/business/31255)