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Tether ($USDT), the largest stablecoin in the cryptocurrency market, also recorded a contraction in February, experiencing its second consecutive monthly decline in market capitalization.
The company’s total market value fell by 0.8 percent in February to $183.61 billion. This marked the first time Tether experienced two consecutive months of decline since the Terra crash in May 2022.
Market observers note that a contraction in stablecoin supply often signals periods of weak risk appetite in the crypto market. The decline in $USDT’s market capitalization may reflect investors’ tendency to convert to cash or shift towards alternative stablecoins.
On the other hand, a partial recovery was observed in USD Coin ($USDC). Rising from its January lows to a market capitalization of approximately $75 billion, $USDC has nevertheless largely remained flat since the beginning of the year. This situation points to a broader stagnation across major stablecoins.
Analysts suggest that the slowdown in stablecoin market growth may be linked to both macroeconomic uncertainties and volatile price movements in the cryptocurrency market.
Stablecoin supply is generally considered a key indicator of new capital inflow into the market. Therefore, the trend in stablecoin market capitalization in the coming months will be critical to the overall direction of the cryptocurrency market.
*This is not investment advice.