How USDT Mints and Burns Move With Bitcoin Price Cycles

How USDT Mints and Burns Move With Bitcoin Price Cycles

Tether’s USDt, the world’s largest stablecoin, has long been viewed as a vital liquidity engine in the crypto ecosystem. Over the past decade, its minting and burning patterns have mirrored Bitcoin’s price cycles with uncanny precision—often rising during bull runs and contracting after corrections. But as the market evolves and new regulatory and institutional dynamics emerge, this relationship may be entering a new phase.

USDT as a Market Pressure Gauge

Data from blockchain tracker Whale Alert reveals that USDT supply movements—minting when new tokens are issued and burning when they are redeemed—frequently align with Bitcoin’s most volatile periods. These patterns, visible from 2015 through early 2025, confirm that USDT remains one of the most sensitive indicators of capital flows into and out of crypto markets.

Large issuances of USDT coincide with Bitcoin price spikes. Source: Whale Alert

“Tether has become a proxy for market liquidity,” said crypto analyst Mads Eberhardt. “Historically, an expanding USDT supply correlates with upward price momentum, particularly in Bitcoin.”

However, Eberhardt also noted a shift: “This correlation has weakened recently as stablecoins gain traction outside of native crypto use cases, such as cross-border settlements and traditional finance integrations.”

USDT Issuance and Bitcoin Bull Runs

Throughout 2024, USDT mints consistently accompanied Bitcoin’s price surges. A strong example came in late October, when Bitcoin jumped from $66,700 to over $106,000 by mid-December. During this period, Tether minted over $30 billion in new USDT—much of it in tight sync with Bitcoin’s price rallies.

• Oct. 30: A $1 billion USDT mint aligned with Bitcoin reaching $72,000.

• Nov. 6: Another $6 billion was minted after BTC rebounded from $65,000 to $75,000.

• Nov. 18-23: Over $22 billion was issued across multiple batches, as Bitcoin surged from $88,000 to nearly $106,000.

Despite this alignment, analysts stress that USDT issuance doesn’t always act as a predictive signal. Many of the largest mints came after price moves were underway, suggesting they reflect growing demand rather than cause it.

“There are exceptions where large mints seem to precede rallies,” said Ki Young Ju, CEO of CryptoQuant, “but overall, stablecoins are no longer the leading indicators they once were. Most new liquidity now enters the market through institutional channels like ETFs or OTC desks.”

A series of large USDT mints in late October and November 2024 accompanied Bitcoin’s rise from $66,700 to over $106,000. Source: Whale Alert

USDT Burns Track Market Corrections

While USDT mints tend to cluster around bullish activity, burns—where Tether reduces circulating supply—are more reactive, usually trailing behind price declines.

Following Bitcoin’s December 2024 peak above $106,000, USDT burns signaled a cooling market:

• Dec. 26, 2024: A $3.67 billion burn occured after BTC dropped to $95,700.

• Dec. 30, 2024: Another $2 billion was removed from circulation as Bitcoin fell to $92,000.

• Feb. 28, 2025: A $2 billion burn followed Bitcoin’s slide to $84,000.

“These burns don’t typically predict downturns,” said Jos Lazet, CEO of asset manager Blockrise. “They act more as confirmation of capital outflows already in motion.”

Total stablecoins held on exchanges today is lower than it was during the 2021 bull market. Source: CryptoQuant

Historical precedent supports this. In June 2022, Tether executed a record-breaking $20 billion burn as Bitcoin crashed from over $65,000 to near $21,000.

Changing Role of Stablecoins in Bitcoin Markets

Despite the historical correlation, the growing complexity of crypto markets may be diluting USDT’s influence over Bitcoin’s price action.

“Stablecoins used to be a strong signal of incoming liquidity,” Ju explained. “Now, they’re just as likely to represent profit-taking, global trade settlements, or general market repositioning.”

Additionally, regulatory headwinds could shift the dynamics entirely. In the European Union, the Markets in Crypto-Assets (MiCA) framework is forcing exchanges to delist USDT due to compliance concerns. In the U.S., upcoming legislation may further constrain how centralized stablecoins like USDT operate, especially in terms of issuance and reserve backing.

Rising Competition and Evolving Use Cases

Tether’s dominance is also being challenged. USDC, Circle’s dollar-pegged stablecoin, is regaining ground with a strong compliance record and renewed institutional interest. After falling to $24 billion in market cap during the 2023 banking crisis, USDC has now surged past $60 billion.

Meanwhile, decentralized stablecoins like DAI are increasingly favored by DeFi users who prioritize censorship resistance and transparency.

USDC market capitalization has recovered to an all-time high. Source: CoinGecko

Looking Ahead

Tether’s USDt remains a powerful force in the crypto economy and a key player in Bitcoin's historical price movements. But as crypto matures, USDT mints and burns may no longer offer the same predictive power.

Whether Tether continues to serve as a reliable indicator of crypto market sentiment will depend on a range of factors—from institutional adoption and global liquidity trends to shifting regulations and stablecoin innovation.

In the words of Eberhardt: “The connection isn’t gone—but it’s changing.”