Tether USDt Hits Record $187B Market Cap in Q4 Despite Crypto Downturn

Tether's USDt has reached a record $187.3 billion market cap in the fourth quarter of 2025, despite the broader crypto market facing a downturn following a major liquidation cascade on October 10 according to on-chain data. This growth has come as other stablecoins, such as Circle's USDC and Ethena's USDe, either stagnated or declined significantly. Tether's stablecoin now accounts for more than 70% of all stablecoin wallets, further solidifying its dominant position.

The on-chain activity for USDt also surged, with $4.4 trillion in transfer volume and 2.2 billion on-chain transfers recorded in Q4. The average monthly active USDt wallets rose to 24.8 million, representing a significant increase in user engagement. Meanwhile, Tether's total reserves grew to $192.9 billion, including $141.6 billion in U.S. Treasuries, placing it among the largest holders of U.S. government debt.

Tether also expanded its user base by 35.2 million in Q4, reaching an estimated 534.5 million users globally. This marks the eighth consecutive quarter of user growth exceeding 30 million, with USDt's dominance in savings and transactional use cases continuing to grow according to Q4 reports.

Why Did This Happen?

The continued growth of USDt has been driven by diverse use cases beyond the crypto market. Tether's report attributes the stablecoin's resilience to demand for savings, payments, and cross-border transfers as detailed in their analysis. During the same period, the total crypto market capitalization declined by more than one-third, while USDt grew by 3.5%. This contrast highlights the stablecoin's appeal as a store of value and medium of exchange in a volatile market according to market analysis.

Tether's strategic diversification of reserves also played a role. The company increased its Bitcoin holdings to 96,184 BTC and its gold reserves to 127.5 metric tons, alongside its growing U.S. Treasury exposure. This diversification strategy has helped Tether maintain a strong balance sheet and mitigate risks from market volatility as reported in their Q4 statement.

How Did Markets React?

The broader crypto market saw a 23.7% decline in Q4 2025, triggered in part by the October liquidation cascade. However, USDt's market share in spot trading on centralized exchanges reached 61.5%, processing $3.2 trillion in volume during the quarter. This growth reinforced USDt's role as the primary stablecoin for value transfers according to The Block analysis.

Despite the crypto market's decline, Tether reported net profits exceeding $10 billion for full-year 2025, largely driven by interest income from U.S. Treasuries and returns on strategic investments. The company's financial strength, including $6.3 billion in excess reserves, has provided stability amid market uncertainty .

What Are Analysts Watching Next?

Tether's Q4 growth was accompanied by challenges in its fundraising efforts. The company initially aimed to raise $20 billion but scaled back to a $5 billion target following investor pushback and valuation concerns . This shift reflects a more cautious approach to capital raising in a slowing crypto sector.

Analysts are closely monitoring Tether's ability to maintain its peg amid increasing market volatility. Additionally, the company has launched programs to curb illicit use of USDt, including collaborations with TRM Labs and Tron to monitor and freeze funds on high-risk addresses. These initiatives are expected to enhance regulatory compliance and investor confidence .

The stablecoin's expansion into emerging markets, particularly through partnerships like Opera's MiniPay wallet, is also under scrutiny. These initiatives aim to broaden financial access and increase USDt's adoption in regions with high demand for dollar-denominated stablecoins .