Tether USDT sees largest supply drop since FTX

USDT supply fell 1.7% in February, its largest drop since FTX, due to EU MiCA rules, a crypto downturn, and capital moving to USDC, even as the stablecoin market grew overall.

Tether's USDT experienced its largest monthly supply drop since the FTX collapse, with a 1.7% reduction—about $1.5 billion—in February. This decline is linked to the European Union's MiCA regulations, a broader downturn in crypto markets, and a decrease in Bitcoin's value. Despite USDT's contraction, the overall stablecoin market expanded, as capital rotated into alternatives like USDC, which saw nearly a 5% increase. The drop in USDT supply reflects lower demand, regulatory pressures, and strategic redemptions by investors. Much of the remaining stablecoin liquidity is now locked in DeFi vaults or used for trading, with limited impact on spot or derivative markets. The shift in stablecoin usage, especially in Europe, underscores evolving market dynamics and regulatory effects.