Tether (USDT) Market Cap Posts First Back-to-Back Monthly Drop Since FTX as Circle (USDC) Stock Surges 16%
Tether burns $6.5B USDT in two months while Circle posts blowout Q4 earnings. With Fear & Greed at 11, the stablecoin landscape is shifting fast.
Tether's USDT market cap is on track for its first consecutive monthly decline since the FTX collapse in late 2022, shedding $3.2 billion in just two months. Meanwhile, rival Circle just delivered a blowout Q4 earnings report that sent its stock surging 16%, as USDC circulation hit $75.3 billion — up 72% year over year.
As of February 25, 2026 at 22:00 KST, Tether has burned a combined 6.5 billion USDT across January and February, compressing its market cap from $186.8B to $183.6B. Circle, on the other hand, reported Q4 2025 EPS of $0.43 — beating consensus estimates of $0.35 by 23% — and saw CRCL shares jump 16% in pre-market trading to $71.17 (CoinDesk). With the Crypto Fear & Greed Index sitting at 11/100 (Extreme Fear) and total crypto market cap at $2.36 trillion, the liquidity dynamics of stablecoins — often called the fuel of crypto markets — have become the variable to watch.
Key Takeaways
Quick Answer: Tether's USDT market cap has dropped $3.2 billion over two months to $183.6B — the first consecutive monthly decline since the FTX collapse. Circle's USDC surged 72% YoY to $75.3B, driven by MiCA compliance and a Q4 earnings beat that sent CRCL stock up 16%.
- USDT market cap shrinking: $186.8B → $183.6B after 6.5 billion USDT burned in Jan–Feb 2026 (CoinDesk)
- Circle earnings surprise: Q4 EPS $0.43 (consensus: $0.35), EBITDA $167M (+412% YoY), CRCL stock +16% pre-market (CoinDesk)
- USDC at all-time high supply: $75.3B circulation, +72% year-over-year, fueled by EU MiCA compliance (CryptoTimes)
- Extreme Fear persists: Fear & Greed at 11/100, marking 19 consecutive days in Extreme Fear — the longest streak since July 2022 (BitDegree)
- Historic signal: USDT 60-day market cap change below -$3B hasn't been seen since the late 2022 bear market bottom
- Bitcoin Season confirmed: Altcoin Season Index at 29/100, total market cap $2.36T, BTC dominance 56.1% (CoinRepublic)
Why Is Tether's USDT Market Cap Falling for Two Straight Months?
Tether (USDT), the world's largest stablecoin by market capitalization, is experiencing its most significant contraction since the FTX exchange collapsed in December 2022. As of February 25, 2026, USDT's market cap stands at $183.6 billion, down $3.2 billion from its recent peak of $186.8 billion. Tether burned 3.5 billion USDT on February 10 alone, following 3 billion USDT burned in January — a combined 6.5 billion USDT removed from circulation in just two months (CoinDesk, Feb 25). This marks the first time USDT has posted back-to-back monthly market cap declines since the wave of institutional collapses that defined late 2022, raising concerns among market participants about liquidity conditions in crypto.
Rachael Lucas, crypto analyst at BTC Markets, put it plainly: "Stablecoins are the fuel that powers crypto markets. When the fuel drains, everything slows down, and that is exactly what we are watching unfold" (CoinDesk).
Two forces are driving the contraction. First, the EU's Markets in Crypto-Assets (MiCA) regulation has restricted Tether's access to European markets due to non-compliance, effectively cutting off a major source of demand. Second, President Trump's announcement of global tariff hikes from 10% to 15% triggered a broad risk-off selloff that hammered crypto along with other risk assets (CNBC, Feb 23). On February 5, crypto markets saw $1.4 billion in liquidations in a single day — the largest wipeout in 90 days (MEXC).
On Binance, USDC — not USDT — currently leads 24-hour spot trading volume at $1.6 billion, a sign that traders may be rotating toward the regulated alternative. BTC trades at $66,061 (+4.91%) on Binance and $66,053 on OKX, while ETH is at $1,954 (+7.08%) as of 22:00 KST.
Circle's Earnings Surprise: Why USDC Is Surging
Circle, the company behind USDC and a publicly listed entity (ticker: CRCL), delivered Q4 2025 results that significantly exceeded expectations. The company reported earnings per share of $0.43 versus the $0.35 consensus — a 23% beat — while EBITDA surged to $167 million, an extraordinary 412% increase year-over-year. Quarterly revenue came in at $770 million with net income of $133 million, and USDC circulation reached a record $75.3 billion, representing 72% annual growth (CryptoTimes, Feb 25). Following the announcement, CRCL shares surged 16% in pre-market trading to $71.17, reflecting strong institutional confidence in the regulated stablecoin model (CoinDesk, Feb 25).
The catalyst behind USDC's growth is regulatory positioning. Circle became the first global stablecoin issuer to achieve full compliance with the EU's MiCA framework, securing legal status across European markets at precisely the moment Tether's non-compliance is costing it market share. As institutional investors increasingly weigh regulatory risk, the preference for transparent, publicly audited stablecoins has become unmistakable.
USDT vs. USDC: The Stablecoin War in Numbers
The stablecoin market is undergoing a structural shift away from USDT's near-monopoly toward a more competitive landscape led by regulatory compliance. While USDT at $183.6 billion still dwarfs USDC's $75.3 billion, the gap is narrowing fast. USDT shed $3.2 billion in two months while USDC posted 5%+ monthly growth. The USDC-to-USDT market cap ratio now stands at approximately 41% — and a breach of 50% would signal a genuine power shift in stablecoin dominance. The following comparison table captures the divergence across every key metric, from market cap trajectory and regulatory status to issuer transparency and financial performance.
| Metric | USDT (Tether) | USDC (Circle) |
|---|---|---|
| Market Cap | $183.6B | $75.3B |
| Monthly Trend | Declining (-$3.2B) | Growing (+5% MoM) |
| YoY Growth | Flat to declining | +72% |
| EU MiCA Compliance | Non-compliant (EU access restricted) | Fully compliant |
| Jan–Feb Supply Change | 6.5B USDT burned | Net issuance increase |
| Issuer Status | Private (limited disclosure) | Public (CRCL, +16% pre-market) |
| Q4 2025 Revenue | Not disclosed | $770M (net income $133M) |
| Transparency | Periodic attestations | SEC reporting obligations |
This structural divergence extends beyond market share. It reflects a broader inflection point in how the crypto industry interfaces with regulation — and which players will survive the transition.
Extreme Fear at 11: What Stablecoin Liquidity Shifts Signal for the Market
The Crypto Fear & Greed Index, which measures market sentiment on a scale from 0 (Extreme Fear) to 100 (Extreme Greed), has been stuck at or below 11 for 19 consecutive days — the longest Extreme Fear streak since July 2022, when Bitcoin was bottoming near $19,000 after the Terra/LUNA and Three Arrows Capital collapses (BitDegree, Feb 25). The total crypto market cap sits at $2.36 trillion with BTC dominance at 56.1%, and the Altcoin Season Index reads 29/100, confirming this remains Bitcoin's market. In this environment of deep fear, USDT's contracting market cap directly signals that sidelined capital — the buying power waiting on the margins — is shrinking, adding structural headwind to any recovery attempt.
Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, described the tariff-driven macro uncertainty as "a mess — no one knows what's next" (The National News, Feb 23).
Binance derivatives data paints a picture of cautious positioning despite the fear. BTC funding rate sits at a neutral 0.0000% with $5.2 billion in open interest, while the long/short ratio is 67.5%/32.5% — longs still dominate but without the leverage excess that typically precedes cascading liquidations. ETH open interest stands at $3.6 billion with a 0.0046% funding rate. SOL open interest is $883.7 million with the highest long bias at 71.7%/28.3%. Notably, DOGE and XRP show negative funding rates (-0.0091% and -0.0034% respectively), indicating that shorts are paying longs — a sign of active bearish bets on these assets.
| Coin | Funding Rate | Open Interest | Long/Short |
|---|---|---|---|
| BTC | 0.0000% | $5.2B | 67.5% / 32.5% |
| ETH | 0.0046% | $3.6B | 67.0% / 33.0% |
| SOL | 0.0068% | $883.7M | 71.7% / 28.3% |
| XRP | -0.0034% | $392.9M | 70.2% / 29.8% |
| DOGE | -0.0091% | $154.3M | 68.6% / 31.4% |
| BNB | 0.0000% | $301.7M | N/A |
| LINK | 0.0100% | $75.3M | N/A |
| ADA | 0.0039% | $78.5M | N/A |
Historically, extreme fear readings below 10 have been followed by extraordinary returns. The all-time low of 6 on June 19, 2022 — when BTC traded at $17,500 — preceded a 12-month return exceeding 150%. The COVID crash reading of 8 in March 2020 at $5,000 BTC preceded a 1,000%+ run. The current reading of 11 sits right at the boundary of that historically bullish zone.
| Date | Fear & Greed Index | BTC Price | 12-Month Return After |
|---|---|---|---|
| Feb 25, 2026 | 11 (Extreme Fear) | ~$66,061 | TBD |
| June 19, 2022 | 6 (All-time low) | $17,500 | +150%+ |
| July 2022 | <10 streak | $19,000 | +180%+ |
| March 2020 (COVID) | 8 | $5,000 | +1,000%+ |
First Consecutive USDT Drop Since FTX: How 2026 Differs from 2022
The last time USDT posted two straight months of market cap decline was December 2022, in the immediate aftermath of FTX's implosion. Back then, USDT shed roughly $2 billion and Bitcoin was carving out a bottom near $16,000 amid a cascade of institutional failures — FTX, Terra/LUNA, Three Arrows Capital, and Celsius had all collapsed within months of each other. The current USDT decline is actually larger in absolute terms ($3.2B vs. $2B), but the market context is fundamentally different. In 2022, the entire crypto infrastructure faced an existential trust crisis. In 2026, the contraction is driven by regulatory realignment (MiCA) and macroeconomic headwinds (Trump tariffs), not systemic fraud. Critically, in 2022 USDC declined alongside USDT; in 2026, USDC is growing in the opposite direction — evidence that capital is migrating toward compliance rather than fleeing crypto entirely.
Alex Thorn, Head of Research at Galaxy Research, captured the current tension: an all-time high is "still possible," but 2026 is "too chaotic to predict" with "risk remaining to the downside in the near term" (CCN, Feb 25).
Bitcoin and Ethereum are both off to their worst start of the year in over a decade (Fortune, Feb 20). ETH has fallen 37% this month alone, with Vitalik Buterin selling 17,000 ETH (~$43 million) in February via CoW Protocol to fund privacy and security projects (CoinDesk, Feb 25). SOL is down 67% from its all-time high of $294, currently trading at $83.71 on Binance (+9.22% in 24h).
Binance & OKX Volume Snapshot: Where the Money Is Moving
As of February 25, 22:00 KST, Binance spot trading volume reveals a notable shift: USDC leads all pairs with $1.6 billion in 24-hour volume, outpacing BTC at $1.4 billion. This ranking — a stablecoin topping Bitcoin in daily volume — underscores the massive flow of capital repositioning through USDC amid the market turmoil. BTC trades at $66,061 on Binance and $66,053 on OKX with a 24-hour range of $62,510–$66,310. ETH shows strong intraday recovery at $1,954 (+7.08%), rebounding from a low of $1,800. SOL at $83.71 posted the biggest gain among major caps at +9.22%, while XRP recovered 5.03% to $1.40. On OKX, tokenized gold (XAUT) at $5,166 (+0.67%) and Paxos Gold (PAXG) at $5,201 on Binance (+0.54%) highlight the parallel flight to safe-haven assets.
| # | Coin | Price | 24h Change | Volume(24h) | High | Low |
|---|---|---|---|---|---|---|
| 1 | USDC | $1.00 | -0.01% | $1.6B | $1.00 | $1.00 |
| 2 | BTC | $66,061 | +4.91% | $1.4B | $66,310.00 | $62,510.28 |
| 3 | ETH | $1,954 | +7.08% | $841.5M | $1,956.79 | $1,800.00 |
| 4 | SOL | $84 | +9.22% | $316.1M | $84.09 | $75.63 |
| 5 | XRP | $1.40 | +5.03% | $216.5M | $1.40 | $1.31 |
| 6 | USD1 | $1.00 | +0.04% | $161.2M | $1.00 | $1.00 |
| 7 | BNB | $612 | +4.37% | $107.6M | $612.42 | $577.06 |
| 8 | ENSO | $2.02 | -9.53% | $71.7M | $3.15 | $1.92 |
| 9 | PAXG | $5,201 | +0.54% | $70.3M | $5,226.63 | $5,116.60 |
| 10 | DOGE | $0.10 | +5.07% | $68.8M | $0.10 | $0.09 |
Outlook: What Investors Should Watch Next
The structural shift in stablecoin dominance is not a short-term blip. With the EU's MiCA now actively enforced and the U.S. GENIUS Act stablecoin legislation advancing, regulatory compliance is rapidly becoming the dividing line between stablecoins that grow and those that shrink. These dynamics will directly shape liquidity conditions, trading volumes, and capital flows across the entire crypto market in the months ahead.
- USDT $180B support level: A break below this threshold would signal further liquidity contraction (currently $183.6B)
- Circle (CRCL) stock trajectory: Post-earnings at $71.17, institutional flows into CRCL serve as a proxy for regulated stablecoin adoption
- Fear & Greed below 10: Historically a contrarian buy signal with 12-month returns of +150%+ — current reading: 11
- USDC/USDT market cap ratio: Currently ~41%; a move above 50% would mark a genuine power shift
- MiCA enforcement timeline: Tether's compliance response (or lack thereof) will determine USDT's European trajectory
- Trump tariff execution: Implementation of 15% global tariffs could trigger another risk-off wave
- BTC derivatives positioning: Neutral funding (0.0000%) with 67.5% long bias — watch for leverage buildup in either direction
On the risk side, further USDT burns, escalating tariff wars, and prolonged extreme fear could trigger cascading liquidations. On the opportunity side, every comparable fear episode in crypto history — June 2022, March 2020 — has marked a generational bottom. The key variable is whether stablecoin liquidity stabilizes, which would provide the structural floor for any sustained recovery.
Frequently Asked Questions
Why is Tether's USDT market cap declining?
Tether burned 6.5 billion USDT across January and February 2026, shrinking its market cap from $186.8B to $183.6B. EU MiCA regulation non-compliance has restricted Tether's access to European markets, while broader crypto market contraction amid Trump tariff uncertainty has reduced demand for stablecoins.
Why is Circle's USDC growing so fast?
Circle achieved full MiCA regulatory compliance, becoming the first global stablecoin issuer with legal status across the EU. Q4 2025 revenue hit $770M with EBITDA surging 412% YoY. USDC circulation reached $75.3B (+72% YoY), driven by institutional demand for regulated, transparent stablecoins.
What does the stablecoin shift mean for the crypto market?
Stablecoins serve as the liquidity backbone of crypto. USDT market cap decline means less sidelined buying power, adding downward pressure on prices. With Fear & Greed at 11 (Extreme Fear), stablecoin liquidity changes are a leading indicator for market direction — reduced fuel means slower recovery potential.
Is USDT or USDC safer?
USDT at $183.6B remains the largest stablecoin with unmatched liquidity across exchanges. USDC at $75.3B offers lower regulatory risk through MiCA compliance and SEC reporting obligations as a public company. The choice depends on your jurisdiction, use case, and risk tolerance. This is not financial advice — always conduct your own research.
Sources
- Leading Stablecoin Tether Shrinks Again, CoinDesk
- Circle Q4 Earnings Beat Estimates, Shares Jump 15%, CoinDesk
- Circle Beats Q4 Expectations, USDC Supply Hits $75B, CryptoTimes
- Bitcoin Falls as Trump Raises Tariffs, CNBC
- Crypto Fear & Greed Index, BitDegree
- Vitalik Buterin Sold 17,000 ETH This Month, CoinDesk
- Altcoins Analysis February 2026, CCN
- Bitcoin, Oil Slide on Trump Tariffs, The National News
- Bitcoin and Ethereum Off to Worst Start of Year, Fortune
This article is for informational purposes only and does not constitute financial advice. All investment decisions should be made based on your own research and judgment.
