In the past month, the exchange rate of USDT has been declining and has failed to maintain a fixed ratio of one-to-one with the US dollar. Additionally, the total supply of USDT has decreased by $3 billion from a peak of over $140 billion. This may be due to Tether selling off some dollar assets in an attempt to stabilize the USDT exchange rate against the dollar.

This situation may be a result of increasing regulatory demands for stablecoins in Europe, which require audits. Tether may struggle to pass these audits because once audited, many credit loan issues may be exposed, such as artificially increasing the money supply. As a result, Tether finds it difficult to meet European regulatory requirements. Consequently, many exchanges and clients are beginning to turn to more regulated stablecoins like USDC. In contrast, the total supply of stablecoins like USDC has been increasing, indicating that funds are flowing into these stablecoins.

The depreciation and decoupling of Tether, along with the forced contraction of credit, is not good for the entire cryptocurrency market!