USDC and USDT Move in Opposite Directions After Crypto Rallies

When crypto prices rise, the two biggest dollar stablecoins don't behave like twins. A new Coin Metrics study finds that USDT supply tends to grow faster the week after a rally, while USDC growth tends to slow down.

That matters if you've ever read a rising stablecoin supply as one big pile of cash waiting to buy Bitcoin. On this evidence, the two coins are doing different jobs for different moments.

The study, "What Drives Stablecoin Supply Growth?", was written by Coin Metrics research associate Cooper Duschang and published on Talos's site on 20 October.

A Rally Pulls USDT One Way and USDC the Other

The prior week's crypto market return explains 4.6% of the variation in USDC's weekly supply growth and 5.3% of USDT's. Both links are statistically significant, but they point in opposite directions.

Coin Metrics puts it simply: "USDT expands as risk-on leverage builds, while USDC mints when markets fall." It says the USDC pattern is consistent with deleveraging and a flight into USDC "as dry powder and an asset for on-chain yields."

There's a quiet bit of brand character showing up in the numbers here. In this data, USDT looks like the coin traders reach for when they want more exposure. USDC looks more like where money settles when markets cool off.

Where Each Coin Is Used Explains a Lot

Part of the difference comes down to where each stablecoin sits in trading. USDT is the margin asset, the collateral traders post, for about 42% of futures markets. It is the main margin asset on most centralised exchange markets.

USDC plays that role for about 10% of futures markets, concentrated on Hyperliquid, dYdX and Deribit.

The strongest single signal in the study is the funding rate on perpetual futures, the regular payment between traders holding long and short positions. Higher funding is followed by faster supply growth the next week for both coins. After controlling for other factors, it explains about 10% of USDC's weekly growth variance and about 4% of USDT's. In a model of the two coins combined, funding alone accounts for 13.3% of the variation.

USDC also responds to a second lever. Coin Metrics measured a carry spread: the Aave v3 supply yield minus the three-month US Treasury bill rate, using data from 2023. For USDC, carry adds real explanatory power, and funding plus carry together explain 15.9% of its weekly growth variance. For USDT and for the combined supply, carry adds nothing meaningful beyond funding.

Most of the Story Still Sits Outside the Model

The researchers used six variables with weekly data over the past four years, lagging each driver by one week. Those lagged factors explain 13% of USDC's weekly growth variance and 16% of USDT's.

No model in the study explains more than 25%. Coin Metrics points to drivers it does not capture, "such as issuer treasury operations, mint/redemption incentives, on and off-ramp integrations, and regulation in different jurisdictions."

It's worth being fair to the dry powder idea. The study doesn't reject it, and it uses that very phrase to describe USDC minting after falls. What the opposite signs do suggest is that adding the two supplies together blends two different behaviours: leverage building in USDT, and caution or yield seeking in USDC. One combined number can hide which of those is happening.

A Slower Year for Both Stablecoins

The findings arrive as growth has cooled. USDC and USDT supply grew to more than $255 billion in 2025, but growth has stagnated in 2026. Neither coin has managed more than 10% month-over-month supply growth this year.

USDC's own history shows how sharply its supply can swing. After the Silicon Valley Bank depeg in March 2023, USDC supply fell from $56.6 billion in 2022 to as low as $27.9 billion in February 2024.

For readers watching stablecoin flows, the practical takeaway from the study is narrower than a buy signal. Funding rates were the clearest lead on next week's supply growth, and the two coins are better read separately than as one pool.