Tether, Inc. burned 1 billion of its USDT supply, which raised questions about the direction of the crypto market. The burn resulted in a decrease in the USDT supply from 138 billion to 137 billion. This follows a series of smaller liquidity withdrawals and is one of the first supply contractions since 2022. The recent removal of USDT liquidity has affected tokens on the TRON network, while the supply on Ethereum remains high. The burn is part of Tether's policy to move more USDT to its Ethereum version, which is widely used for both centralized trading and DeFi. The divestment of TRC-20 stablecoins has led to a short-term loss in stability, but the current shift in holdings may boost Ethereum-based DeFi. The decreasing USDT supply may be due to expectations of lowered usage in the European Union, which is shifting to compliant stablecoins like USDC. Tether, Inc. has yet to acquire a license for EU-based banking, which may further slow down usage and innovation. Despite these developments, Tether remains one of the most widely used assets in the crypto market.



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