According to CryptoQuant analyst Moreno, USDT liquidity is experiencing one of the sharpest contraction phases in its history. The 60-day change in USDT's market capitalization has dropped to a decline of roughly $4 billion, close to the most negative levels ever recorded. The pace of contraction is still accelerating: over the past 11 days, USDT supply has decreased by about $870 million, indicating this is not simply a lagged effect of earlier redemptions. Stablecoins serve as the most direct source of available liquidity in the crypto market. Sustained USDT expansion has often accompanied stronger bitcoin price performance, while prolonged contraction tends to correspond with weak demand, market corrections, and declining risk appetite. Moreno cautions, however, that the correlation between USDT flows and BTC prices does not prove a direct causal relationship; both may be driven by risk-aversion sentiment, with redemption pressure occurring alongside spot selling. He also suggests that the current bitcoin decline is not an isolated event — it is happening while one of the market's primary liquidity sources continues to shrink, which helps explain why recent rebounds have struggled to persist. To improve the market environment, USDT's 60-day change needs to stabilize, daily supply contraction must slow, and supply should return to an expansion phase.
CryptoQuant analyst Moreno said in a post that USDT liquidity is going through one of the sharpest contractions in its history. The 60-day change in USDT's market capitalization has fallen to a decline of roughly $4 billion, near the most negative level on record.
The contraction is still accelerating. Over the past 11 days, USDT supply has dropped by about $870 million, which Moreno said suggests the decline is not merely a lagged effect of earlier redemptions.
Stablecoins are the most direct source of available liquidity in crypto markets. Sustained USDT expansion has often coincided with stronger bitcoin price performance, while prolonged contraction phases tend to correspond with weak demand, market pullbacks, and lower risk appetite.
However, Moreno stressed that the correlation between USDT flows and bitcoin prices does not prove direct causation. Both could be driven by the same risk-aversion sentiment, with redemption pressure and spot selling occurring simultaneously.
He also framed the current bitcoin decline not as an isolated event, but as happening against a backdrop of one of the market's main liquidity sources shrinking persistently, which helps explain why recent bounces have failed to last. For the market environment to improve, he said, USDT's 60-day change needs to stabilize, daily supply contraction must slow, and supply should re-enter an expansion phase.
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