A recent multibillion-dollar decline in Tether USDt’s market capitalization and volumes is not enough to suggest a bearish turn on markets, according to the crypto financial services platform Matrixport.
Tether’s USDt (USDT) stablecoin has recorded a 2.8% market cap drop since peaking at $141 billion on Dec. 19, 2024, according to data from CoinGecko.
USDT trading has also seen a massive decline in the past few weeks, with daily volumes plummeting 64% from around $154 billion in mid-December to $55 billion on Jan. 6, 2025.
However, USDT’s falling trend is likely a result of a trading slowdown linked to the holiday season and should not be associated with a bearish shift in crypto markets, Matrixport said in an X post on Jan. 6.
Matrixport predicts bullish momentum resuming soon
In the post, Matrixport mentioned that an increase in stablecoin trading volumes is usually a bullish indicator for the crypto market, reflecting more fiat money flowing into the ecosystem.
“However, when these trends reverse, it often signals a consolidation phase for Bitcoin and the broader crypto market,” Matrixport reported.
“While Tether’s market cap has declined recently and trading volumes have tapered off, it may be premature to turn bearish,” Matrixport wrote, adding:
“These trends could simply reflect the seasonal lull during the Christmas holiday period. With the new year underway, it won’t be long before we see whether the market’s bullish momentum resumes.”
Matrixport isn’t alone in highlighting the ongoing holiday illiquidity season.
On Jan. 4, CryptoQuant analyst Axel Adler said Bitcoin (BTC) needs to accumulate more trading volume for a strong bullish impulse, which will likely come after the market recovers from the holiday season.
Community slams FUD around Tether and MiCA
Matrixport’s remarks on Tether came amid the community reacting to earlier reports linking the USDT’s market drop with the full implementation of the European Union’s Markets in Crypto-Assets Regulation (MiCA).
While some online reports suggested that European crypto exchanges should have delisted Tether’s USDt by Dec. 30, 2024, local regulators have not given such guidance.
The European Securities and Markets Authority (ESMA) — a key supervisor of MiCA compliance — has repeatedly declined to comment on the status of USDT under MiCA to Cointelegraph, even after the Dec. 30 deadline.
Related: XRP flips USDT again to become the 3rd-largest crypto by market cap
USDT trading has also continued across Europe following Coinbase’s USDT delisting, with exchanges like Binance in late 2024 stating that USDT will remain supported on the platform until further notice.
Many community members on X have slammed the reports on USDT delisting from major exchanges in the European Union, labeling such reports as fear, uncertainty and doubt (FUD).
“All ‘news’ about the Tether USDt delisting from major global crypto exchanges due to the EU MiCA law was just FUD,” one industry observer wrote on X on Jan. 6.
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