Tether’s USDT, the world’s largest US dollar-pegged stablecoin, is heading for its steepest monthly supply decline in years as big holders step up redemptions, according to blockchain data. The circulating supply of USDt USDT has fallen by about $1.5 billion so far in February, following a $1.2 billion decrease in January, according to Artemis Analytics data reported by Bloomberg. This puts USDT on track for its biggest monthly drop in three years, since the weeks following the collapse of cryptocurrency exchange FTX in November 2022. The USDT supply logged a $2 billion decrease in December 2022 after the collapse of FTX and its 150 subsidiaries sent shockwaves through the crypto industry.
The current decline may signal a contraction in crypto market liquidity, as Tether’s USDT is the primary on-ramp for crypto investors. Its $183 billion market capitalization accounts for about 71% of the total stablecoin market, according to CoinMarketCap.
Whales wallets sold $69.9 million USDT across 22 wallets over the past week, marking a 1.6-fold increase in the selling rate of this cohort, according to crypto intelligence platform Nansen. The leading traders by returns, tracked as “smart money,” have also been net sellers of USDT. At the same time, new wallets created in the past 15 days bought about $591 million worth of USDT over the week, according to the platform. The mixed flows highlight a market split between large holders redeeming or reallocating capital and new entrants stepping in to take the other side, even as overall stablecoin issuance remains broadly steady.
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