Tether’s USDT, the leading stablecoin denominated in US dollars, recorded a massive decline in circulating supply worth $1.5 billion in February, the biggest decline in recent years, according to Artemis Analytics data reported by Bloomberg. Whale addresses are redeeming the tokens.
The decline follows the $1.2 billion decline recorded in January. It is also close to the levels seen in December 2022 after the collapse of FTX, which resulted in a $2 billion USDT contraction. Investors’ response to the event reflected the stablecoin supply’s representation of overall market sentiment.
Stablecoin Market Shows Resilience
While the USDT market share is declining, the stablecoin market as a whole seems to be holding steady. The total capitalization of all dollar-linked stablecoins increased slightly from $300 billion to $307 billion in February, according to DeFiLlama.
Other stablecoins, such as those issued by Circle, or USDC, had a slightly different experience, as they decreased by about 0.9%. Other stablecoins, such as USD1, which relates to World Liberty Financial, had a significant increase of about 50%, reaching a capitalization of $5.1 billion.
Tether Moves Whales Exit Buyers
According to recent data on blockchain activity, there are divergent trends in investor behavior. Over the past week, 22 whale wallets have sold $69.9 million USDT, a 1.6 times increase, as indicated by data from Nansen. On the other hand, wallets less than 15 days old have purchased about $591 million USDT.
This divergence indicates that market forces are changing, as large players reduce their holdings, presumably redeploying their capital, and new entrants are supporting USDT as the leading stablecoin. The overall amount issued continues to be constant, supporting market stability.
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Tether’s USDT Supply Drops Crypto Liquidity
The reduced supply of Tether’s USDT may affect the liquidity in the crypto space. The reduced supply may also impact the trading volumes for Bitcoin and other cryptocurrencies, as it serves as a gateway for investors.
This data reflects the changing trends of investors in real-time, even in the midst of speculation. Investors should take into account on-chain data and regulatory factors while analyzing trends in stablecoins.
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