USDT Faces Largest Monthly Decline Since FTX Collapse Amid Market Downturn

• February 22, 2026

The market capitalization of USDT, the world’s largest stablecoin by circulation, has experienced a notable contraction during February, marking the most significant monthly decline since the aftermath of the FTX exchange collapse in December 2022. This downturn interrupts a previously sustained period of growth for the digital asset.

Data from Artemis Analytics indicates that the circulating supply of Tether tokens diminished by roughly $1.5 billion over the month. This reduction comes after a challenging start to the year, with January witnessing declines across the broader cryptocurrency market that have put pressure on stablecoin demand and issuance.

Market Context Behind USDT’s Decline

The contraction in USDT supply highlights shifts in investor behavior amid volatile market conditions. Stablecoins like USDT often serve as a hedge or a bridge between fiat currencies and more volatile cryptocurrencies. When overall market sentiment turns negative, demand for stablecoins can vary based on traders’ liquidity needs and strategies.

February’s contraction in USDT supply is the most substantial since the significant market disruption triggered by the collapse of the FTX exchange in late 2022. The fallout from that event led to widespread uncertainty within the crypto sector, affecting liquidity and trust in various digital assets, including stablecoins.

While USDT remains a dominant force in the stablecoin sector, this recent decline underscores the asset’s sensitivity to broader market dynamics and investor confidence. The crypto market’s vulnerability to shocks and regulatory developments continues to influence stablecoin circulation and capitalization.

Industry observers will be monitoring whether this decrease reflects a temporary market adjustment or signals a longer-term shift in stablecoin utilization patterns. The evolving landscape of digital assets requires close attention as market participants navigate uncertainty and seek stability under fluctuating conditions.

As the year progresses, the performance of stablecoins like USDT will remain a critical indicator of the crypto market’s health and investor sentiment. The close correlation between stablecoin circulation and broader asset trends provides valuable insights into liquidity flows and market confidence.

Tether’s USDT saw its biggest monthly drop in circulation since late 2022, reflecting broader crypto market weakness.