Tether has burned about $3.5bn of USDT, marking one of the largest stablecoin redemptions on record as crypto markets came under renewed selling pressure and liquidity conditions weakened.
Tether Burns $3.5bn USDT as Market Stress Accelerates Redemptions
10 February 2026 - 13:25 CET
By Matt Neill
The burn reflects a direct reduction in circulating USDT supply following redemptions by holders, a process typically associated with capital exiting crypto markets during periods of heightened volatility.
Onchain data shows the burn was executed on 10 Feb through an internal transfer from Tether Treasury to a Tether multisignature wallet, a pattern commonly associated with USDT redemption and subsequent supply removal.
Tether CEO Paolo Ardoino said on X that the purpose of the burn was "swaps across chains", from Ethereum to Solana and Tron.
As of 11:00 UTC those transfers had still not materialized on either the Solana or Tron blockchains.
Redemption mechanics and historical scale
Transfers from Tether Treasury to its multisignature wallet are widely monitored as a precursor to USDT being redeemed and burned. The latest transaction reduced circulating supply by approximately $3.5bn in a single move.
The burn ranks as the second-largest USDT redemption ever recorded on Ethereum. The largest Ethereum-based redemption occurred on 20 Jun 2022, when about $4.5bn of USDT was removed from circulation during the crypto credit crisis.
A comparable redemption of around $3bn was recorded on 20 Jan 2026. Prior to that, redemptions of this scale were largely confined to periods of severe market stress, particularly during the 2022 bear market.
Markus Thielen, CEO of 10x Research, said the move likely reflects weakening market conditions.
"The move is likely driven by off-ramping and points to declining liquidity in crypto markets," Thielen told Sandmark.
Ethereum and Tron redemption context
When redemptions across both Ethereum and Tron are considered, the latest burn ranks as the third-largest USDT supply reduction on record.
On Tron, USDT redemptions are typically executed by burning tokens to a designated blackhole address. The most recent Tron redemption above $3bn occurred in June 2023, when about $3.1bn was removed from circulation.
The largest Tron-based redemption took place in June 2022, when approximately $6.6bn of USDT was burned. That event coincided with the broader crypto market capitulation that followed the collapse of several major lenders and funds.
Across both networks, the largest redemptions cluster around periods of sharp price declines, forced deleveraging and stressed liquidity conditions.
Managing a falling market
The USDT burn occurred as bitcoin briefly fell below $60,000 on 5 Feb, before rebounding toward just under $70,000. The move followed a sharp sell-off that triggered large liquidations across derivatives markets.
Liquidity conditions deteriorated during the decline, with leveraged positions unwound rapidly and spot demand failing to absorb selling pressure. In such environments, stablecoin redemptions typically increase as investors convert digital assets back into fiat.
Tether remains the largest stablecoin issuer globally, with USDT widely used across exchanges, derivatives venues and decentralized finance platforms. Changes in its circulating supply are closely watched as a real-time indicator of crypto market liquidity.
