The market capitalization growth of Tether (USDT) has turned negative for the first time since Q3 2023. The market capitalization, which was over $187 billion at the beginning of January this year, has decreased to $184.3 billion, a change that historically precedes periods when Bitcoin (BTC) prices are stagnant or declining.
What happened: Reduction in stablecoin supply
CryptoQuant's 60-day average USDT market capitalization change indicator flipped in February, entering negative territory. This indicator tracks the correlation between Bitcoin prices and USDT market capitalization increases; an increase in USDT is interpreted as new liquidity flowing into the cryptocurrency market, while a decrease is seen as capital leaving.
This decrease coincides with Tether's large-scale burn activities.
On February 10, Whale Alert captured the reported burning of 3.5 billion USDT, which follows last month's burning of 3 billion USDT.
According to CryptoQuant data, this marks the largest two consecutive burns in history. Burns occur when investors redeem USDT for fiat currency, and Tether removes those tokens from circulation to maintain a 1:1 peg with reserves.
Also Read: Ethereum Stalls Below $2,050 As Bears Tighten Grip
Why it matters: Weakening buying pressure
Analyst Crypto Tice explained through said that the impact is clear. Buying power is diminishing, downward support is weakening, and upward rallies are being pressured to sell off more quickly. He noted, "Historically, in phases where the supply of stablecoins is reduced, sustained increases for $BTC have not occurred."
Investor Ted also raised similar concerns. He stated, "The supply of USDT entered a downward trend for the first time since the first quarter of 2025. This is not a good sign."
However, past data provides some perspectives.
Since 2022, the period when the 60-day average turned negative generally lasted about two months, coinciding with Bitcoin forming local bottoms. This can be observed in the periods from November 2022 to January 2023 and from August 2023 to October 2023.
Read Next: Third-Largest Bitcoin Miner Sells 4,451 BTC Marking Pivot To AI