Leading stablecoin Tether shrinks again as market cap eyes second straight monthly drop

Markets Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Leading stablecoin Tether shrinks again as market cap eyes second straight monthly drop Growth of tether and other top stablecoins has stalled, posing risk to the broader crypto market. By Omkar Godbole | Edited by Shaurya Malwa Feb 25, 2026, 7:43 a.m. Make us preferred on Google Tether faces second-monthly contraction. (Unsplash, Kanchanara) What to know : Tether’s market value has fallen for a second consecutive month, a rare contraction that echoes the post-Terra 2022 downturn and signals renewed stress in crypto markets. Analysts say shrinking stablecoin supply, combined with weak demand for U.S.-listed spot bitcoin ETFs, raises doubts about the durability of any recovery in bitcoin and broader digital assets. While USDC has rebounded from its January low to about $75 billion in market value, its growth has flattened this year, underscoring a broader stall across major stablecoins. Tether USDT $ 1.0003 , the world's largest stablecoin by market value, continues to shrink and looks set for a second straight monthly contraction, signaling challenging conditions for a sustainable broader market recovery. Tether's market capitalization has dropped by 0.8% to $183.61 billion this month, extending January's 1% slide from a record $186.84 billion, according to data source CoinDesk. This hasn't happened since TerraForm Labs' collapse in 2022, which wiped out billions in investor wealth and shook investor confidence in stablecoins. STORY CONTINUES BELOW Don't miss another story. Subscribe to the Crypto Daybook Americas Newsletter today . See all newsletters Sign me up By signing up, you will receive emails about CoinDesk products and you agree to our terms & conditions and privacy policy . "Stablecoins are the fuel that powers crypto markets. When the fuel drains, everything slows down, and that is exactly what we are watching unfold," Rachael Lucas, crypto analyst at BTC Markets, said in a post on LinkedIn. Stablecoins are digital tokens whose value is pegged to an external reference, such as the U.S. dollar or other fiat currencies. They are often touted as tokenized versions of fiat currencies and help users bypass price volatility risks associated with other tokens, such as bitcoin. That's why, over the years, they have evolved into funding currencies for crypto trading and a mode of moving capital across borders, including day-to-day payments in some regions. The ongoing contraction in tether indicates capital outflows from the crypto market. This, coupled with tepid demand for U.S.-listed spot ETFs, casts doubt on the sustainability of potential recovery rallies in bitcoin and the wider crypto market. Bitcoin BTC $ 64,923.69 , the leading cryptocurrency by market value, has failed to build momentum since its downtrend paused near $60,000 on Feb. 6. Prices briefly bounced above $70,000 days later but have since pulled back to trade around $65,000, CoinDesk data show. Note that the growth of other prominent stablecoins, such as the U.S.-regulated USDCoin (USDC), has stalled as well, though it's been more resilient than tether. While USDC's market cap has recovered to nearly $75 billion from its January dip to $70 billion, it remains flat year to date. Tether Stablecoins USDC More For You Vitalik Buterin sold 17,000 ETH this month as ether fell 37% By Shaurya Malwa | Edited by Sam Reynolds 48 minutes ago The Ethereum co-founder's tracked wallets dropped from 241,000 ETH to 224,000 ETH in February, with sales routed through CoW Protocol in small batches to limit market impact. What to know : Vitalik Buterin has reduced his ether holdings by about 17,000 ETH, or $43 million, in February after pledging a similar amount to fund privacy and security projects. The sales, executed in many small trades via the CoW Protocol, have coincided with a 37% drop in ether's price over the past month to around $1,900. Ether's decline and compressed staking yields near 2.8% have deepened unrealized losses for major corporate holders such as Bitmine Immersion Technologies. 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