USDT’s market capitalization has fallen by about $4 billion over the past 60 days, according to CryptoQuant head of research Julio Moreno, bringing the reading close to its most negative level on record. Over the past 11 days alone, USDT supply has dropped by another roughly $870 million. Moreno said one of the market’s most direct sources of liquidity is fading, helping explain why Bitcoin’s recent rebound has lacked force.
Bitcoin traded at $64,086 on Aug. 5, up 0.70% over the past 24 hours. Over the past seven days, the broader crypto market has been stuck in a consolidation range of roughly $2,000. The report also said Bitcoin’s seven-day range was just $1,045, while the asset was still up 5.12% over 60 days.
USDT supply keeps shrinking
Moreno said the 60-day change in USDT market cap is now sitting at about negative $4 billion. More importantly, the contraction is still getting worse. With supply down another roughly $870 million over the past 11 days, the move cannot be read only as a delayed impact from an earlier wave of redemptions. The process is still ongoing. USDT’s market cap currently stands at about $183.1 billion.
The article said newly issued USDT typically goes straight to exchanges, where it acts as dry powder for traders buying crypto. If stablecoins are treated as a core source of bull-market demand, that growth has stalled since mid-October last year.
Reading is near levels last seen late in the 2022 bear market
The last time this indicator fell to a similar level was in the late stage of the 2022 bear market. At that point, Bitcoin was bottoming near $16,000, with the market caught in a loop of panic and forced liquidations.
This time, the price backdrop is different. Bitcoin is now at $64,086 and remains 49.17% below its all-time high of $126,080. The market structure is not the same as it was in 2022, but the liquidity reading has returned to a similar zone.
GENIUS Act and the shift in idle dollars
The report said 2026 includes a variable that was not present in 2022. The U.S. GENIUS Act prohibits stablecoin issuers from paying yield to holders, and idle dollars have been moved into tokenized U.S. Treasury funds instead. That sector has grown to nearly $17 billion, compared with about $11 billion at its February high.
Morgan Stanley cut its price target on Circle to $38 on Aug. 3, citing tokenized funds as a threat to USDC’s funding base.
At the broader market level, total stablecoin supply has fallen from a peak of $322.1 billion in mid-May to about $307.5 billion in early August. June alone saw $11.4 billion disappear. The report said some of that reflected defensive repositioning, while part of it came from a structural shift after regulation shut off direct yield on stablecoins.
Moreno’s caution on causality
On why falling USDT supply could affect Bitcoin, the article said newly issued USDT usually flows to exchanges and becomes capital for traders buying coins. When supply contracts, available liquidity shrinks, buying power weakens, and rebounds can lose steam once the initial momentum fades.
Moreno also stressed that correlation does not equal causation.
Why this contraction is not the same as 2022
The article said the current reading may be close to the 2022 bear-market bottom, but the drivers are different. In 2022, the move was tied to forced liquidations and panic redemptions, with Bitcoin near $16,000. This time, the GENIUS Act’s ban on yield payments is part of the picture, and some idle capital has rotated into tokenized U.S. Treasury funds worth nearly $17 billion.