The market capitalization of the stablecoin Tether (USDT) has declined for two consecutive months for the first time since 2022. Its total value dropped by 0.8% in February to $183.6 billion following a 1% drop in January. This contraction signals moderating liquidity demand in the crypto markets as the supply of USD Coin also shows limited growth despite a recent recovery.
The stablecoin Tether has recorded its first two-month decline in market capitalization since the collapse of Terraform Labs and its Terra USD stablecoin in 2022. Its total value fell 0.8% in February to $183.61 billion, continuing a 1% contraction from January.
Analysts interpret the shrinking supply as a sign that investors are deploying capital more cautiously. A crypto analyst pointed out that stablecoin supply typically increases during periods of heightened trading activity.
Circle‘s USD Coin (USDC) has shown some resilience, with its market cap recovering to about $75 billion after a decline to around $70 billion in January. However, USDC remains flat year-to-date, indicating limited new capital flowing into major dollar-pegged assets.
Stablecoins have become an integral component for facilitating global crypto trading. The current stagnation suggests a lack of capital rotation in the broader digital asset space, which may impact the sustainability of recoveries in other major cryptocurrencies.
