USDT Triggers Rare Signal Last Seen at 2022 Bitcoin Bottom, but Rebound May Be Slower
Key Takeaways
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USDT supply has plunged sharply, triggering a rare signal only seen at the 2022 Bitcoin bottom, when fear peaked after FTX collapsed.
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Back then, heavy USDT redemptions marked the cycle low, followed by a powerful multi-year rebound as selling exhaustion set in.
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Today, Bitcoin sits far higher after a strong bull run, suggesting any rebound may be slower, choppier, or require additional downside first.
Tether’s USDT stablecoin is flashing a market signal not seen since Bitcoin (BTC) hit rock bottom in late 2022.
The sharp drop in USDT supply, reminiscent of the panic following the FTX collapse, signals potential market turbulence—but history may not repeat exactly this time.
The rare contraction has traders watching closely, as it often coincides with major market turning points.
Yet today’s crypto ecosystem is far larger, more mature, and dominated by institutional players, suggesting any rebound could be slower, choppier, and less predictable.
USDT Supply Shrinks to FTX-Crisis Levels
According to CryptoQuant, the 60-day change in USDT’s total supply has plummeted to a negative $3 billion—the second time in history.
Market observers are watching closely, noting that such redemptions historically come from large institutions or whales exiting the crypto system, rather than simple coin swaps.
“Think of USDT as the ‘cash’ everyone holds while waiting to buy or sell other coins,” the report explains. “When new USDT is minted, fresh money pours in; when redeemed, money leaves.”
Bloomberg reports that USDT is on track for its largest monthly decline since December 2022, having already fallen by roughly $1.5 billion in February 2026.
Daily outflows have surged, with three consecutive days seeing more than $1 billion removed from circulation in a 24-hour period.
Echoes of 2022: How the Last Signal Sparked a Rebound
The FTX collapse in late 2022 triggered a market-wide sell-off.
Confidence in cryptocurrencies was shaken, and stablecoins like USDT came under scrutiny.
During that period, the 60-day USDT variation fell below -$3 billion, Bitcoin tumbled to around $16,000, and forced liquidations swept across exchanges.
Once selling pressure eased, USDT flows stabilized, and capital began re-entering the market.
Bitcoin climbed steadily in 2023, surged through 2024, and hit unprecedented highs by 2025.
Analysts point out that the pattern—a dramatic USDT contraction followed by a strong recovery—has repeated across previous cycles.
“Extreme liquidity stress has historically marked opportunity, but only once selling exhaustion is confirmed,” said CryptoQuant analyst Ignacio Moreno.
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