22nd January 2026 – (New York) Demand for Tether’s USDT stablecoin has cooled sharply in January 2026, prompting concern that weakening stablecoin growth could dampen the next phase of the crypto market, including any potential rally in Bitcoin.
Data from CryptoQuant shows a pronounced deceleration in USDT’s circulating supply, signalling slower growth in stablecoin liquidity across the market. Historically, periods of reduced USDT issuance have tended to coincide with softer momentum in digital assets. The 60-day average change in USDT market capitalisation illustrates the shift clearly, with expansion falling from around $15 billion in late November 2025 to roughly $3.3 billion more recently.
While analysts caution that the slowdown may prove temporary, they note that stablecoin flows are still expected to expand significantly in the long term, with total payment volumes projected to reach $56 trillion by 2030. Even so, comparisons with previous market cycles suggest a familiar pattern, as rapid increases in USDT supply have often aligned with Bitcoin price surges, while slower growth has typically preceded periods of consolidation or decline.
Although the key 60-day market capitalisation change has not yet turned negative, other warning signs have emerged. Over the past month, USDT supply on the Ethereum network has fallen, and the token has traded consistently below the $1 mark. CryptoQuant stressed that this does not represent a loss of the peg, but the combination of declining supply and discounted pricing points to capital leaving the market rather than being redeployed into new positions.
Adding to the cautious outlook, Tether Treasury recently burned 3 billion USDT, its first such move since May last year and the largest burn in three years. USDT is removed from circulation when holders redeem it for US dollars, and the scale of the burn suggests increased redemptions by large investors amid heightened macroeconomic and geopolitical uncertainty.
If outflows continue to build, the stablecoin market’s recent plateau near $308 billion in total value could give way to a broader correction, potentially increasing downside risks across the crypto sector. That said, USDT demand has not disappeared entirely, with Iran’s central bank reportedly purchasing around $507 million worth of the stablecoin as part of efforts to bypass sanctions and support its domestic currency.
