Why Is Tether Burning Billions in USDT?

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Why Is Tether Burning Billions in USDT？

• Tether burns $1.8B USDT, signals active supply control amid keen market watch
• Recent $3.8B USDT total burn may tighten crypto liquidity & impact DeFi
• Large Tether burns question stability strategy as regulators increase scrutiny

Tether has burned a massive $1.8 billion USDT via a single Ethereum transaction, according to data flagged by Whale Alert. The transaction permanently removed 1,799,478,900 USDT from circulation, originating directly from the Tether Treasury address.

This latest burn was a followup to a similar $2 billion USDT removal on March 1, bringing the total destroyed in recent weeks to roughly $3.8 billion and intensifying discussion about Tethers supply management.

Why Is Tether Burning Billions in USDT？

Market watchers are speculating on the reasons behind these large-scale burns. One theory suggests its a strategic response by the stablecoin issuer to potentially slower demand for USDT on centralized exchanges or within DeFi protocols.

Another common belief is that these burns reflect significant redemption requests from institutional clients – something Tether itself has pointed to previously as a trigger for removing large amounts of USDT from the market.

Tether CEO, Paolo Ardoino frequently explains that burning USDT is a part of routine treasury operations. He clarifies that tokens are typically removed when issued USDT is redeemed by holders for cash.

Burns can also occur during operational rebalancing across different blockchain networks. However, the sheer size of these recent burns is drawing attention, particularly as the crypto market remains highly sensitive to changes in liquidity.

Could Tethers USDT Burns Affect the Crypto Market？

Its worth noting that despite these burns, the total circulating supply of USDT has hovered near its all-time highs, and Tether continues to be the dominant stablecoin by market capitalization.

The stablecoin firm recently reported $2.85 billion in excess reserves and record quarterly profits. Still, with regulators eyeing stablecoin transparency and capital flows, every major USDT burn draws attention.