Glassnode Finds Inverse Correlation Between Bitcoin Price and USDT Supply

A recent on-chain analysis made by Glassnode revealed a notable inverse relationship between Bitcoin (BTC) trading activity and the movement of Tether’s U.S. dollar-pegged stablecoin, USDt, over the past two years.

This negative correlation suggests that during periods where BTC price is on the rise, investors tend to withdraw USDt from exchanges, signalling profit-taking and a shift towards holding the assets outside of exchanges.

Glassnode Report Links USDT Exchange Net Outflows to Bitcoin Gains

In a Wednesday X post, Glassnode shared a comparison chart between Bitcoin’s price and net exchange flows of USDt from December 2023 until October 2025. According to their report, net outflows of USDT coincided with BTC gains.

The report underscores a consistent pattern: during “euphoric phases”, USDT typically flows out of the exchanges at a rate of $100 million to $200 million daily. This outflow represents investors locking in their profits and converting them into physical holdings or moving funds to other investment avenues.

Glassnode noted that when bitcoin registered a new all-time high of $126,198 in early October, USDT net outflows surged to more than $220 million in a single day, indicating a clear profit-taking phase, which is now easing as flows have turned positive again.

A separate analysis made by Whale Alerts in April also showed a distinct correlation between BTC price movements and USDT issuance. They plotted Tether’s net minting and burning rates alongside the price of bitcoin from 2015 to early 2025.

The report noted that Tether typically mints more tokens during cryptocurrency bull runs to support liquidity and trading activity. Conversely, the stablecoin giant burns tokens during market corrections, removing USDT from circulation as traders seek to consolidate their gains or reduce crypto exposure.

This correlation highlights the role of USDT and other stablecoins as both a market stabilizer and a reflection of broader investor sentiment.

Crypto analyst and researcher Mads Eberhardt said at the time that a greater supply of stablecoins has historically correlated with positive price performance across the crypto market.

USDT Mints Have Preceded Bitcoin Bull Runs, While Burns Tracked Corrections

Whale Alert’s data showed a consistent pattern of periods of aggressive USDT minting coinciding with major bitcoin bull runs. This was the case in late 2020 and throughout 2024, when net new USDT issuance rose to tens of billions of dollars as the BTC price accelerated upward.

Between October and December 2024, when bitcoin went on a parabolic run from $66,700 to $106,000, there was a significant mint of $1 billion in USDT on October 30, when the price was at $72,000. After facing a brief correction at this level, BTC went on another rally, from $65,000 to $75,000, which resulted in Tether minting another $6 billion in two batches on November 6.

This was followed by a sharp rally that pushed BTC to $88,000. Another mint of $6 billion happened on November 18, which marked the beginning of bitcoin’s next leg up, kickstarting a rally that boosted the price to just under $99,000 by November 22. During this period, Tether issued another $9 billion in USDT in three separate batches. Another $7 billion mint followed on November 23, which came right before a brief pullback and bitcoin’s ultimate surge to $106,000 on December 17.

Conversely, periods of sustained USDT burns often occur during or shortly after market corrections. This pattern suggests that redemptions tend to follow crypto price pullbacks.

This was visible in the weeks after bitcoin’s December 2024 peak, as bitcoin’s price declined through January and into March 2025. On December 26, a major USDT burn of $3.67 billion occurred right after BTC dropped from around $106,000 to $95,713. 

Four days later, on December 30, a small burn of $2 billion in USDT followed as bitcoin continued to decline toward the $92,000 level. On January 10, $2.5 billion in fresh USDT was minted before BTC rebounded above $106,000, followed by a $2 billion burn that preceded a month-long decline that saw BTC fall from six-digit peaks to around $84,000.

While mints appear to often front-run rallies, burns rarely precede downward moves in the market. Instead, they are a confirmation of the downtrend that is already underway, making them a useful indicator for tracking post-break market behaviour and assessing the scale of market cooling. The same can also be said for mints, which, in many observed cases, occurred during or after the price momentum was already underway, designating them as a metric to confirm an ongoing rally.

In June 2022, Tether burned a massive $20 billion in USDT when bitcoin tumbled from over $65,000 to around $21,000.

USDT’s Influence Over the Bitcoin Market Dwindled as ETFs and Crypto Equities Entered the Space

While historical data shows a clear relationship between USDT supply and BTC price movements, there are several other factors that dictate the current market, such as regulations, spot Bitcoin exchange-traded fund (ETF) flows, and BTC-backed equities. The industry is yet to find concrete evidence that shows Tether’s issuance influencing bitcoin’s price, or if the USDt mints flow directly into the alpha crypto asset.

CryptoQuant CEO Ki Young Ju pointed out that USDt’s role in bitcoin price cycles has been steadily dwindling as most of the new liquidity that is entering the market comes through BTC-backed stocks (MSTR) and exchange-traded funds (IBIT, FBTC, GBTC), primarily via Coinbase’s BTC/USD market or over-the-counter desks. He also said that stablecoins are no longer an important signal for determining bitcoin’s market direction.

At the time of writing, Bitcoin (BTC) is trading at $91,551 – up 5.24% in 24 hours.

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