Tether USDT Market Cap Drops as Expert Links It to Holiday Season Declines

The market cap of Tether USDT fell 2.8% from its peak of $141 billion on December 19, 2024, according to data from CoinGecko.

Simultaneously, USDT daily trading volumes plunged 64%, dropping from $154 billion to $55 billion as of January 6, 2025.

However, crypto financial services platform Matrixport emphasized that this Tether USDT market cap drop is linked to seasonal trends rather than market weakness.

Matrixport Cites Seasonal Holiday Impact

Matrixport highlighted that the Tether USDT market cap drop coincided with the holiday season’s typical market slowdown. In a January 6 post on X (formerly Twitter), Matrixport explained:

“While Tether’s market cap has declined recently and trading volumes have tapered off, it may be premature to turn bearish. These trends could simply reflect the seasonal lull during the Christmas holiday period.”

The platform pointed out that stablecoin trading activity often slows during major global holidays, contributing to lower market liquidity and reduced transaction volumes.

Matrixport remains optimistic despite the Tether USDT market cap drop. The platform noted that an increase in USDTtrading volume could signal renewed bullish momentum for Bitcoin and the broader crypto market.

“An increase in stablecoin trading volumes is usually a bullish indicator, reflecting more fiat money flowing into the ecosystem,” Matrixport reported.

The firm suggested that once market activity resumes after the holiday period, USDT volumes and its market cap may experience a rebound.

Tether USDT Market Cap Drop Not Linked to MiCA

The Tether USDT market cap drop coincides with speculation surrounding the European Union’s Markets in Crypto-Assets Regulation (MiCA).

Some reports incorrectly claimed that the MiCA framework required USDT delisting from European exchanges by December 30, 2024.

However, regulatory bodies like the European Securities and Markets Authority (ESMA) have not provided clear guidance on Tether USDT under MiCA.

The ESMA has repeatedly declined to comment on USDT’s compliance status, even after the mentioned deadline.

“All ‘news’ about the Tether USDt delisting from major global crypto exchanges due to the EU MiCA law was just FUD,” a prominent industry observer stated on X.

Exchanges like Binance have continued supporting Tether USDT trading across Europe despite Coinbase’s earlier delisting. Binance clarified in late 2024 that USDT remains available for European users until further notice.

Crypto analysts have echoed Matrixport’s stance that the Tether USDT market cap drop is not a sign of market weakness. On January 4, CryptoQuant analyst Axel Adler highlighted Bitcoin’s low trading volumes, citing the same holiday slowdown as a contributing factor.

Adler noted:

“Bitcoin needs to accumulate more trading volume for a strong bullish impulse, which will likely emerge once holiday market conditions normalize.”

This aligns with Matrixport’s view that Tether USDT’s market cap drop is part of a temporary market phase rather than a long-term bearish trend.

The Tether USDT market cap drop has also sparked debate on social media platforms like X. Many users have criticized the reports linking the drop to MiCA regulations, calling them unfounded fear, uncertainty, and doubt (FUD).

“Reports claiming the delisting of Tether USDT due to MiCA are misleading. There’s no regulatory confirmation,” said a user in the crypto community.

Market observers have pointed out that Tether USDT’s market cap drop can be explained by reduced liquidity during the holiday period rather than regulatory enforcement.

Temporary Decline or Trend Shift According To The Tether USDT Market Cap Drop

The Tether USDT market cap drop has drawn significant attention due to its size and timing. However, industry experts like Matrixport and CryptoQuant have downplayed fears of a bearish shift, citing seasonal market patterns.

With the holiday period ending, market participants will closely watch whether USDT’s volumes rebound, potentially signaling renewed bullish momentum in early 2025.

Emphasizing the importance of context in market analysis. Stay updated with the latest developments in the cryptocurrency industry through The BIT Gazette