USDT market capitalization shrinks for two consecutive months, and stagnant stablecoin growth may cast a shadow over the recovery of the crypto market

On February 25, the world’s largest stablecoin by market cap, Tether (USDT), saw its market value decrease by 0.8% to $183.61 billion this month, continuing a trend from January’s peak of $186.84 billion, which declined by about 1%. This marks the first consecutive monthly contraction since the TerraForm Labs collapse in 2022 and is seen as a sign of tightening market liquidity. Analysts point out that stablecoins are the “liquidity fuel” of the crypto market, and a contraction in supply usually indicates net capital outflows. Against this backdrop, demand for US spot Bitcoin ETFs remains weak, leading to cautious market expectations for a sustained rebound.

In terms of price, Bitcoin has failed to generate sustained momentum since stabilizing around $60,000 on February 6. Although it briefly rebounded above $70,000, it has since retreated to around $65,000 and is fluctuating within that range. Meanwhile, another major stablecoin, USD Coin (USDC), recovered from a low of $70 billion in January to about $75 billion, but overall growth for the year has stagnated, indicating a slowdown in the expansion of major stablecoins. Market participants believe that if stablecoin supply cannot expand again, the overall recovery of the crypto market will continue to face liquidity constraints.