Tether USDT supply set for biggest monthly decline since 2022 FTX collapse

CoinTelegraph

by Zoltan Vardai

February 20, 2026

AI-Generated Deep Dive Summary

Tether’s USDT, the largest US dollar-pegged stablecoin, is on track for its biggest monthly supply decline in three years, following the collapse of FTX in November 2022. The circulating supply of USDT has dropped by approximately $1.5 billion so far in February, building on a $1.2 billion decrease in January. This sharp reduction reflects increased redemptions by large holders and institutional traders, signaling a shift in market dynamics. The trend raises concerns about the stability and demand for Tether’s stablecoin, which has long been a cornerstone of the cryptocurrency ecosystem. The decline in USDT supply comes amid broader crypto market volatility and heightened scrutiny of stablecoins. Following FTX’s collapse, which shook confidence in the sector, Tether faced its own challenges, including questions about its reserves and transparency. The $2 billion drop in December 2022 marked a turning point, as investors and institutions began to reassess their reliance on USDT. Now, with February’s figures showing another sharp decline, the narrative around stablecoin health is taking center stage. This situation matters because Tether’s stability directly impacts the broader crypto market. As a widely used asset for trading, lending, and liquidity, USDT plays a critical role in maintaining market functionality. A sustained drop in its supply could signal reduced confidence among major players, potentially leading to further market corrections or shifts toward alternative stablecoins like USD Coin (USDC) or others. For crypto enthusiasts and investors, this underscores the importance of understanding risks and diversifying holdings in an ever-evolving financial landscape.

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Originally published on CoinTelegraph on 2/20/2026