USDT Demand Stalls in January, Signaling Capital Outflows from the Market

The market has not seen issuers mint billions of dollars in stablecoins daily in recent months. In January 2026, stablecoin growth showed clear signs of slowing. This signal raises questions about what the market may be facing next.

By comparing stablecoin trends with Bitcoin price movements and similar historical periods, several potential scenarios emerge. These comparisons help investors gain a more comprehensive view of possible risks ahead.

USDT Market Capitalization Stalls, Raising Concerns About Continued Correction

Data from the USDT Market Cap Change by CryptoQuant tracks daily changes in the market capitalization of the leading stablecoin.

The 60-day average (60-day market cap change – SMA30) shows that the pace of USDT market cap growth has declined sharply since late November last year. Growth fell from around $15 billion to approximately $3.3 billion.

When compared side by side with Bitcoin’s price, a strong correlation becomes apparent. In previous cycles, rising liquidity—reflected by rapid increases in USDT market cap—often moved in parallel with Bitcoin rallies.

Conversely, when liquidity growth slowed, Bitcoin typically entered a period of stagnation. In worse scenarios, the market shifted into a downtrend.

Although the 60-day market cap change – SMA30 has not yet turned negative, the latest signals from the 2026 market environment are sending warnings.

First, the market capitalization of USDT (ERC-20)—which accounts for more than 50% of the total USDT supply—has declined over the past month. At the same time, USDT has traded consistently below $1 during this period.

This does not indicate a USDT depeg. However, a declining market cap, combined with sub-$1 pricing, reflects capital outflows. Stablecoin holders appear less interested in seeking new opportunities and more inclined to cash out.

Second, Tether Treasury recently burned 3 billion USDT. This marked the first burn since May last year. CryptoQuant data shows this was also the largest USDT burn in the past three years.

Some observers interpret this move as a sign of caution from large players amid macroeconomic uncertainty and rising geopolitical tensions. This process typically occurs when investors redeem USDT for USD, prompting Tether to remove the corresponding USDT from circulation.

“Someone big just completely exited the market,” investor Ted commented.

These signals remain early and are not yet strong enough to confirm a definitive trend. However, if they intensify, the stablecoin market’s two-month stagnation at around $308 billion in total capitalization could end and shift into a corrective phase.

In that scenario, Bitcoin and altcoins may face an increased risk of entering a bear market—an outcome most investors would prefer to avoid.