USDT Supply Drops by $4 Billion, Raising Liquidity Concerns and Reducing Investor Market Exposure

The supply of USDT has decreased by $4 billion in a short period, indicating a decline in market buying pressure.

It has become clear that the supply of the stablecoin USDT, which is a core infrastructure of the cryptocurrency market, is rapidly shrinking.

According to data analysis platform CryptoQuant, the supply of USDT has decreased by approximately $4 billion (about 637.7 billion yen) over the past 60 days. Researcher Stacy Muur pointed out that about $870 million (approximately 138.7 billion yen) worth of USDT has vanished from the market in just 11 days, reducing the total market capitalization to about $183 billion (approximately 29 trillion yen).

Since stablecoins are a primary means for investors to inject funds into the market instantly, this decrease strongly reflects the situation where traders are restraining their direct exposure to cryptocurrencies and holding back on positions. The price of Bitcoin (BTC), a major cryptocurrency, is being pushed back from its peak, which is cited as a factor contributing to the slowdown in demand for stablecoins as trading reserves.

Competitor "USDC" Also Declines, Leading to Reduced Liquidity and Increased Capital Movement to Yield Farming

This supply reduction is not merely a transition to coins issued by other companies. The supply of USDC, a competitor, is also showing a declining trend, indicating that users have not simply switched their assets from Tether (USDT) to USD Coin (USDC). The simultaneous decrease in balances of both major coins suggests a significant risk of dwindling liquidity (immediate buyer funds) across the entire market.

However, it cannot be concluded that this capital has completely exited the cryptocurrency ecosystem, as the presence of "yield" has been pointed out as one of the factors. Investors may not just be holding coins as standby funds on exchanges but are likely shifting capital to DeFi lending protocols such as Aave and Morpho to earn interest income.

Capital Redistribution to Certain Chains Like Tron Amid Overall Market Contraction

While the overall market size is shrinking, capital inflow continues on specific blockchains.

Currently, about 97% of the total USDT issuance is concentrated on Tron and Ethereum. However, according to data from Token Terminal, the market capitalization of stablecoins on the Tron network has increased by $10.8 billion (approximately 1.7 trillion yen). Significant growth has also been observed in emerging and specific area chains such as HyperEVM (approximately $5.2 billion: 829 billion yen increase) and X Layer (approximately $1.7 billion: 271 billion yen increase).

Thus, while the sharp decline in USDT signals a warning of liquidity shortages in the overall market, it also highlights the ongoing "capital redistribution" within the cryptocurrency space, such as the aggregation towards Tron, which has strong payment and remittance demand, and the reallocation to yield products.

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