Tether's USDT stablecoin issuance has consistently mirrored Bitcoin price cycles over the past decade, with new tokens typically minted during bull runs and burned following market corrections, according to data from blockchain analytics firm Whale Alert.
What to Know:
- Data shows USDT minting frequently coincides with or precedes Bitcoin price rallies, particularly evident in late 2024's surge
- USDT burns typically follow market downturns, serving as confirmation rather than predictive indicators
- Experts debate whether the correlation will persist as stablecoins find more non-crypto use cases and regulatory scrutiny increases
The relationship between the world's largest stablecoin and Bitcoin's performance has long been speculated about in cryptocurrency markets.
With a market capitalization exceeding $144 billion, USDT has become a crucial liquidity vehicle in crypto markets and is often viewed as a proxy for broader capital inflows.
Whale Alert's longitudinal data reinforces how tightly USDT issuance patterns track with Bitcoin's price movements, though experts remain divided on whether minting causes price increases or simply reflects growing market demand. The direction of causality continues to spark debate among analysts and traders attempting to forecast market movements.
Crypto researcher Mads Eberhardt noted that historically, greater stablecoin supply has correlated with positive crypto market performance. "However, it's important to note that we have not observed this correlation over the past few months," Eberhardt said. "I expect that as stablecoins see increasing adoption in non-native crypto use cases, this correlation will gradually weaken over time."
Recent Minting Patterns Coincide With Bitcoin's Rise
The data reveals a striking pattern in late 2024, when Bitcoin surged from $66,700 on October 25 to over $106,000 by December 16. This dramatic price movement was accompanied by a series of substantial USDT mints.
The first significant issuance in this cycle was a $1-billion mint on October 30, coinciding with Bitcoin reaching $72,000 before a brief correction. As Bitcoin climbed from $65,000 to $75,000 in early November, Tether minted another $6 billion on November 6.
Bitcoin posted moderate gains over the next three days, during which an additional $6 billion in USDT was issued in two separate batches. This was followed by a sharp rally that pushed Bitcoin to $88,000.
A mint of $6 billion on November 18 marked the beginning of Bitcoin's next leg up, initiating a rally that drove the price to just under $99,000 by November 22. During this period, Tether issued another $9 billion in three separate batches. A final mint of $7 billion on November 23 preceded a brief pullback and Bitcoin's ultimate surge to $106,000 by December 17.
Ki Young Ju, CEO of blockchain analytics firm CryptoQuant, believes USDT's influence on Bitcoin price cycles is diminishing despite these apparent correlations. "Most of the new liquidity entering the Bitcoin market today is coming through MSTR and exchange-traded funds, primarily via Coinbase's BTC/USD market or over-the-counter desks," Ju told Cointelegraph.
"Stablecoins are no longer an important signal for determining Bitcoin's market direction," he added. "In fact, the total amount of stablecoins held on exchanges is lower than it was during the 2021 bull market."
In many observed cases, the largest mints occurred after price momentum was already underway. The $6-billion mint on November 6 came after Bitcoin had already rebounded from $65,000 to $75,000. Similarly, more than $15 billion in USDT was minted between November 18 and 23 amid rapid upward price action rather than ahead of it.
There are several notable exceptions. A pair of mints totaling $7 billion around November 13 and the $7 billion minted on November 23 appeared shortly before fresh rallies, suggesting that in some instances, large issuances may anticipate or help catalyze further price movement.
"These days, most newly issued stablecoin liquidity is either for global trade settlements or represents profits from Bitcoin's rise being converted into liquid form, which increases market cap — not necessarily fresh inflows," Ju explained.
Burns Follow Market Corrections
Conversely, periods of sustained USDT burns — when tokens are removed from circulation — often occur during or shortly after market corrections. This pattern suggests that redemptions tend to follow price declines rather than precede them.
This relationship was evident in the weeks after Bitcoin's December 2024 peak above $106,000. As Bitcoin declined through January and into March 2025, several significant burns occurred.
On December 26, 2024, a major USDT burn of $3.67 billion followed Bitcoin's drop from around $106,000 to $95,713. Four days later, a smaller burn of $2 billion coincided with Bitcoin's continued decline toward $92,000.
The pattern briefly reversed on January 10, 2025, when a $2.5-billion USDT mint occurred before Bitcoin rebounded to over $106,000. By February 28, another $2 billion in USDT was burned following a month-long decline from Bitcoin's six-digit peaks to around $84,000.
Unlike mints, burns rarely precede downward moves. Instead, they tend to confirm what's already underway, making them useful for tracking post-peak behavior rather than identifying market tops in real time.
This pattern has been observed throughout USDT's existence, including a record-breaking $20-billion USDT burn on June 20, 2022, when Bitcoin tumbled from over $65,000 to around $21,000.
However, experts caution against viewing burns as definitive signals. "Currently, we have no evidence of a correlation between burns and market tops, nor as a lagging indicator," Jos Lazet, founder and CEO of asset management firm Blockrise, told Cointelegraph.
Regulatory Changes May Alter Relationship
While historical data demonstrates a clear relationship between USDT supply changes and Bitcoin price movements, the industry has yet to find concrete evidence suggesting USDT issuance directly influences Bitcoin's price.
"It is not feasible to relate USDT supply (or minting) to a specific trading volume, as the majority of the trading against stablecoins happens on centralized exchanges, especially relating to Bitcoin," Lazet said. "What can be easily seen is that the far majority of the trading volume relates to Bitcoin, and similarly the Bitcoin trading volume is largely done against USDT. However, it probably won't be feasible to directly correlate these events."
The connection between USDT issuance and Bitcoin could soon face disruption from regulatory developments. The European Union's Markets in Crypto Assets (MiCA) framework imposes new compliance requirements on stablecoin issuers, prompting several exchanges to delist USDT from their platforms.
In the United States, proposed legislation could reshape how centralized stablecoins like USDT are issued, backed, and redeemed. Increased regulatory scrutiny may reduce issuers' flexibility or prompt a shift toward more compliant alternatives.
Meanwhile, competition in the stablecoin market is intensifying. USDC, with its strong compliance focus, has recovered from the Silicon Valley Bank crisis that saw its market cap drop from $56 billion to $24 billion. It has since reached an all-time high capitalization exceeding $60 billion.
Decentralized stablecoins like Dai are gaining traction among users who prioritize censorship resistance and blockchain transparency.
Closing Thoughts
Tether's influence on Bitcoin and the broader crypto market remains significant, but the relationship appears to be evolving. Whether USDT mints and burns will continue serving as reliable indicators of capital flow depends on how regulatory changes, user preferences, and infrastructure developments reshape the stablecoin ecosystem in coming years.
As cryptocurrency markets mature and institutional participation grows through regulated vehicles like ETFs, the historical correlations between stablecoin issuance and Bitcoin price movements may weaken, potentially creating new market dynamics in this rapidly evolving sector.