Leading stablecoin Tether shrinks again as market cap looks set for second straight monthly drop

CoinDesk

by Omkar Godbole

February 25, 2026

AI-Generated Deep Dive Summary

The world's largest stablecoin, Tether (USDT), continues to experience a decline in market capitalization, signaling challenging conditions for the broader cryptocurrency market. With its market cap dropping by 0.8% to $183.61 billion this month, Tether follows January's 1% slide, marking the first back-to-back monthly contraction since the collapse of TerraForm Labs in 2022. This stagnation in stablecoin growth raises concerns about the sustainability of a crypto market recovery, as stablecoins are essential for facilitating transactions and reducing volatility risks. The decline in Tether's value indicates capital outflows from the cryptocurrency market. This trend is compounded by lackluster demand for U.S.-listed spot ETFs, casting doubt on whether bitcoin and other cryptocurrencies can sustain any potential recovery. Bitcoin has struggled to gain momentum since pausing its downtrend near $60,000 in early February, with prices fluctuating between $65,000 and $70,000 but failing to maintain upward movement. Stablecoins like Tether play a critical role in the crypto ecosystem by serving as a bridge for cross-border capital flows and enabling everyday transactions. However, their current contraction reflects broader market uncertainty. While other prominent stablecoins such as USDCoin (USDC) have shown resilience, they too are experiencing growth stalls, with USDC's market cap remaining flat year-to-date after recovering from January's dip to $70 billion. The situation underscores the importance of stablecoins in driving crypto markets and highlights the risks posed by their stagnation. Rachael Lucas, a crypto analyst at BTC Markets, warns that when the "fuel" behind these markets drains, it slows down activity across the board. This contraction not only impacts trading volumes but also investor confidence, potentially hindering broader market recovery efforts. For readers interested in crypto, this trend matters because stablecoins are foundational to the ecosystem. Their decline signals deeper issues in the

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Originally published on CoinDesk on 2/25/2026