TL;DR
- USDT Supply Drop: Tether’s stablecoin is nearing its largest monthly supply decline since the 2022 FTX fallout, with February’s $1.5 billion reduction following January’s $1.2 billion drop.
- Stablecoin Market Shift: Despite USDT and USDC contracting, the broader stablecoin market grew 2.33%, driven partly by USD1’s 50% surge to $5.1 billion.
- Whale vs. New Wallet Flows: Whales sold $69.9 million in USDT, and smart money remained net sellers, while new wallets bought $591 million.
Tether’s USDT is approaching its steepest monthly supply decline since the aftermath of the FTX collapse, as whales and smart money traders continue reducing their holdings. On-chain data shows that the world’s largest dollar‑pegged stablecoin is undergoing a notable contraction, with February’s pullback extending a trend that began at the start of the year. The shift comes at a time when USDT remains the primary liquidity gateway for crypto investors, making its supply movements a key indicator of broader market sentiment.
USDT Supply Declines at Fastest Pace in Years
Tether’s stablecoin circulating supply has fallen by about $1.5 billion so far in February, following a $1.2 billion drop in January, according to Artemis Analytics data reported by Bloomberg. This trajectory puts the stablecoin on track for its largest monthly decline in three years, echoing the sharp redemptions seen after FTX collapsed in November 2022. At that time, Tether’s stablecoin supply fell by $2 billion in December 2022 as the exchange’s failure and its 150 subsidiaries rattled the crypto sector.
The current decline may signal tightening liquidity, given the stablecoin’s role as the dominant on‑ramp for digital asset trading. With a market capitalization of $183 billion, USDT accounts for roughly 71% of the stablecoin market, according to CoinMarketCap. Yet the broader stablecoin ecosystem is not contracting. Total stablecoin market capitalization has risen 2.33% in February, climbing from $300 billion to $307 billion, according to DeFiLlama. While USDT and USDC slipped 1.7% and 0.9%, respectively, the Trump‑family‑linked USD1 surged 50% to reach $5.1 billion.
Whales Reduce Exposure as Selling Accelerates
Large crypto investors have been actively trimming their USDT positions. Whale wallets sold $69.9 million across 22 wallets over the past week, marking a 1.6‑fold increase in selling activity, according to Nansen. Smart money traders have also been net sellers, reinforcing the trend of major holders pulling back or reallocating capital.
Despite the selling pressure, new market entrants are stepping in. Wallets created within the past 15 days purchased about $591 million worth of USDT over the week, Nansen data shows. The contrasting flows underscore a market divided between established players reducing exposure and fresh participants absorbing supply, even as overall stablecoin issuance remains broadly stable.
