In the cryptocurrency market, USDT (Tether), as the largest stablecoin by market capitalization, has become the core source of liquidity for Bitcoin (BTC) trading pairs. The minting and burning mechanism of USDT directly reflects the inflow and outflow of market funds.
Minting: Tether mints new USDT based on demand, usually injecting it into exchanges to provide trading liquidity.
Burning: When users redeem USDT for dollars, USDT is burned, reducing the circulating supply.
Data from the past decade shows that changes in USDT supply are highly positively correlated with BTC prices: minting often precedes or accompanies bull markets, while burning confirms bear markets. The BTC/USDT trading pair accounts for over 70% of total BTC trading volume, and changes in USDT directly affect BTC pricing.
1. USDT Minting: The "Rocket Fuel" for BTC Prices
Mechanism: When institutions/retail investors buy crypto assets, demand for USDT → Tether mints new USDT → liquidity injected into exchanges → buy BTC, driving prices up.
Historical Evidence (Summary of Key Events)
From 2025 to present: Net minting of $15.7B, BTC rebounded from $84K to over $106K.
Why is it effective?
Liquidity Injection: New USDT directly enters the BTC/USDT order book.
Psychological Signal: The market views minting as a sign of "large capital entering," triggering FOMO.
Leverage Amplification: In perpetual contracts, USDT long leverage pushes prices higher.
2. USDT Burning: The "Brake Pedal" for BTC Prices
Mechanism: In a bear market, users redeem USDT → supply contracts → liquidity decreases → selling pressure amplifies.
Typical Cases
● February 28, 2025: $2B burned, BTC fell from six-figure highs to $84K.
● 2022 Bear Market: USDT market cap shrank from $83B to $66B, BTC halved.
● Burning Effect: Asymmetric—minting clearly pushes prices up, while burning often serves to "confirm declines" rather than lead.
Net supply changes are a key indicator: from 2025 to present, minting > burning, indicating an overall bull market for BTC.
3. Custom Indicator · USDT Minting and Burning Signal Effect
(Chart OKX-BTCUSDT Perpetual Contract)
(Chart OKX-ETHUSDT Perpetual Contract)
When USDT is burned at high levels, it often signals a potential market downturn; conversely, when USDT is minted at low levels, the market is more likely to see upward opportunities. Simple and intuitive signal capture helps in determining market turning points and assists in trading decisions.
4. Custom Indicator · Script Source Code
// @version=2
// Create your custom script here
longlimit = 100000000 // Alert for minting $100 million shortlimit = 0 // Alert for any burning
closem1 = security('i:usdtissue:tether', '5m', close) change = closem1 - close_m1[1]
islong = change > longlimit
isshort = change < shortlimit
plotText(islong, title='Minting Buy', text = 'Minting', refSeries = low, bgColor='green', color='white', fontSize=14, placement='bottom' ,display=true); plotText(isshort, title='Burning Sell', text = 'Burning', refSeries = high, bgColor='red', color='white', fontSize=14, placement='top' ,display=true);
alertcondition(islong, title='Minting', direction='buy'); alertcondition(isshort, title='Burning', direction='sell');
exitLong(isshort, price='market', amount=1)
exitShort(islong, price='market', amount=1)
enterLong(islong, price='market', amount=1)
enterShort(isshort, price='market', amount=1)
5. Conclusion
USDT minting = buy signal, burning = warning to reduce positions. The crypto market is not a zero-sum game—liquidity is key. USDT has forged the BTC legend, and the future holds even more.
By using AiCoin's custom indicators, investors can achieve real-time monitoring of market liquidity and refined alerts, combining past experiences with data-driven tools to timely adjust investment strategies, reduce risks, and improve decision-making efficiency, thus gaining a decision-making advantage in the complex and volatile crypto market. This is not just an investment aid but also an effective way to help you deeply understand market dynamics.
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