Tether”s USDT experienced a significant drop in its circulating supply, decreasing by $1.5 billion in February. This marks the most substantial monthly decline since the FTX collapse in December 2022. As of February 19, the total supply of USDT stood at approximately $183.7 billion, down from a peak of $187 billion recorded in early January, according to data from Artemis Analytics reported by Bloomberg.
Interestingly, the overall stablecoin market saw growth during this timeframe, expanding to $304.6 billion in February from $302.9 billion at the end of January. Circle”s USDC made notable strides, increasing nearly 5% to reach $75.7 billion. The data suggests that the capital is not exiting the stablecoin ecosystem but rather shifting from Tether to USDC.
Several factors are contributing to the decline in USDT”s supply. A broader selloff in the cryptocurrency market, which began in October, has led to a $2 trillion reduction in market valuation, diminishing the demand for stablecoin liquidity. Additionally, the implementation of Europe”s MiCA regulations has prompted exchanges to limit the use of non-compliant stablecoins. Furthermore, the decline in Bitcoin”s price this year has reduced trading activity and leverage that typically drives demand for USDT.
In contrast, USDC has gained momentum, accounting for a substantial portion of total stablecoin transaction volumes. In 2025, the overall volume of stablecoin transactions reached $33 trillion, with USDC contributing $18.3 trillion compared to USDT”s $13.3 trillion. Despite having a smaller market cap, USDC is processing more transaction volume than Tether.
As the landscape of stablecoins evolves, USDT holders may wonder if this is a cause for concern. The recent 0.8% drop in supply is relatively minor when viewed in context; in 2022, USDT experienced larger contractions of 13%, 9%, and 6% in successive months. The stability of USDT”s $1 peg remains intact, and its reserves appear to be secure. Nevertheless, the competitive environment is changing, and Tether”s previously unchallenged dominance is facing new challenges. The future will depend on how strictly MiCA regulations are enforced and whether institutional capital will continue to favor regulated options.
