Tether sees $1B drop in USDT as Bitcoin recovery faces challenges

Tether’s USDT shed nearly $1 billion in market capitalization over five days in mid-October 2026, a contraction that is putting pressure on Bitcoin’s recovery at a delicate moment. The numbers behind the contraction On-chain analytics firm CryptoQuant tracked the $1 billion decline as Bitcoin was attempting to rebuild upward momentum. The broader picture, drawn from data compiled by Crystal Intelligence, is harder to ignore. USDT balances held across 19 major exchanges and lending platforms fell by $4.6 billion between early July and October 1, 2026. Over that same period, those platforms absorbed approximately $1.9 billion in competing stablecoins, primarily USDC and RLUSD, suggesting traders did not exit the market entirely but did rotate away from Tether specifically. Bybit illustrated that rotation most sharply. The exchange shed $1.66 billion in USDT while simultaneously adding $315 million in RLUSD, making it the single platform with the largest net USDT outflow in the dataset. Overall USDT supply declined about 0.4%, or approximately $647 million, through September 2026, leaving the total near $184 billion. By October 20, that figure had slipped further to around $183 billio...