The USDT supply is expected to decrease the most this month since the collapse of FTX in 2022

Tether USDT, the world's largest stablecoin pegged to the US dollar, is experiencing its strongest monthly supply reduction in years as major investors increase withdrawal activity, according to blockchain data.

Based on a Bloomberg report citing Artemis Analytics data, the circulating supply of USDT has decreased by approximately 1.5 billion USD so far in February, after a 1.2 billion USD decline in January. This puts USDT on its steepest downward trend in three years, since the collapse of the FTX cryptocurrency exchange in November 2022.

Previously, in December 2022, USDT's supply had fallen by 2 billion USD following the collapse of FTX and its 150 subsidiaries, which caused significant shocks in the crypto industry.

Cryptocurrency Market Liquidity Shows Signs of Contraction

The recent decline in USDT supply may indicate shrinking liquidity in the crypto market. As the largest stablecoin, USDT plays a crucial role as a gateway for investors entering the crypto space. With a market capitalization of 183 billion USD, USDT currently accounts for about 71% of the total stablecoin market cap, according to CoinMarketCap data.

Tether USDT, Monthly Supply Change Rate, Monthly Summary | Source: Artemis Analytics, BloombergCointelegraph reached out to Tether for comment on the reasons behind the supply decrease in February but has not received a response as of publication.

Stablecoin Market Remains Stable in February

Despite the significant reduction in USDT supply, this does not necessarily mean the entire stablecoin market is in decline. According to data from DeFiLlama, the total market cap of stablecoins across all exchanges increased by 2.33% in February, rising from 300 billion USD to 307 billion USD.

Total Stablecoin Market Cap | Source: DeFiLlama While the two largest stablecoins, USDT and Circle’s USDC, decreased by 1.7% and 0.9% respectively, USD1—a stablecoin linked to the Trump family and issued by World Liberty Financial—saw an impressive 50% growth in market cap, reaching 5.1 billion USD as of Friday, according to DeFiLlama.

Diverging Trends: Whales Reduce Holdings, New Wallets Increase Purchases

Large investors, known as “whales,” are significantly reducing their USDT holdings. According to analytics platform Nansen, in the past week, 22 whale wallets sold a total of 69.9 million USD worth of USDT, with selling speed increasing 1.6 times compared to previous periods.

Additionally, top traders tracked under the “smart money” category have also become net sellers of USDT. However, a notable development is that new wallets created within the past 15 days have purchased approximately 591 million USD worth of USDT during the same period, according to Nansen data.

USDT on Ethereum, “God Mode” token chart, one-year | Source: Nansen These contrasting flows reflect a market landscape with clear polarization: while large investors are withdrawing or reallocating assets, new investors are actively entering, helping to maintain overall stablecoin supply stability.

Mr. Giáo