USDT Capital Outflow in February 2026: Market Capitalization Changes and Impact on the Crypto Market

In February 2026, the market experienced a significant contraction in USDT supply. As the largest stablecoin by market capitalization, its reduced supply has been particularly notable in recent years and coincides with periods of increased volatility across the cryptocurrency market. Based on comprehensive market data estimates, USDT’s market cap decreased by approximately $1.5 billion to $1.7 billion this month, a scale comparable to the turbulence following the FTX collapse in 2022.

By mid-February, USDT’s market cap fluctuated between $18.3 billion and $18.5 billion, below the over $18.7 billion level at the end of 2025. These figures are based on public market trackers, and actual numbers may vary slightly depending on the methodology. Overall, the data reflect a phase of supply adjustment within the stablecoin sector rather than a systemic crisis.

Meanwhile, according to data from open analysis platforms, the total market cap of stablecoins still exceeds $30 billion. This indicates that demand for dollar-pegged digital assets remains strong, even as liquidity shifts among different asset classes.

Possible Reasons for USDT Supply Contraction

Multiple factors underlie the reduction in USDT supply. First, the overall adjustment in the cryptocurrency market has led investors to adopt a more cautious stance. Amid price fluctuations of major assets like Bitcoin, some market participants may be rebalancing their portfolios or reducing exposure to certain stablecoins.

Second, competition within the stablecoin sector continues to intensify. Investors are increasingly dispersing liquidity across multiple issuers to reduce reliance on a single token. This evolution in market structure does not necessarily indicate a loss of confidence in any one asset but reflects diversification trends.

Additionally, regulatory changes in certain regions—such as policies under Europe’s MiCA framework—may influence regional usage patterns. While difficult to quantify precisely, indirect indicators suggest shifts are occurring in demand dynamics across markets.

Growth of Other Stablecoins

In the context of USDT supply contraction, USDC has further solidified its position. In February, USDC’s market cap was estimated between $7.5 billion and $7.7 billion, showing positive growth since the start of the year. This trend indicates that liquidity within the stablecoin space is being redistributed internally rather than flowing out of the asset class altogether.

Demand for other stablecoins is especially evident in decentralized finance (DeFi), where transparency of reserves, audit frequency, and regulatory positioning are key factors influencing user decisions. Nevertheless, USDT continues to maintain high levels of active trading on networks like Ethereum and TRON, which account for a large share of stablecoin trading volume. This suggests that current changes are more about market share rebalancing rather than a sharp decline in USDT’s overall influence.

Impact on Liquidity and Volatility

Stablecoins serve as the primary settlement layer on both centralized and decentralized trading platforms, so changes in supply can affect order book depth and overall trading activity. Historically, periods of USDT supply contraction have often been associated with increased volatility, although the relationship is not always directly causal.

If the trend of USDT supply reduction persists, it could temporarily intensify price swings and prompt further capital rotation among digital assets. However, current data do not indicate systemic instability. The total market cap of stablecoins remains near historical highs, reflecting sustained demand for dollar-pegged crypto assets.

Summary

February 2026 marks a phase of structural adjustment within the stablecoin market. The dynamics surrounding USDT highlight shifts in liquidity patterns and increased competition among issuers. With the overall stablecoin market cap remaining above $30 billion, these changes are more indicative of capital reallocation rather than an industry crisis.

Looking ahead, market participants will continue to monitor fluctuations in USDT and other stablecoin market caps, as well as the overall liquidity conditions involving major digital assets like Bitcoin.