- USDT’s market cap has fallen to $183 billion — its lowest level since October 2025.
- Over the past 60 days, the stablecoin’s supply has shrunk by roughly $4 billion, marking one of the deepest contractions on record, CryptoQuant said.
- Analysts believe the liquidity squeeze is weighing on Bitcoin’s recovery, although historically such phases have also preceded a fade in selling pressure.
CryptoQuant analysts said USDT’s stablecoin supply has dropped sharply, nearing historically extreme levels, in their view. They believe declining liquidity is one of the key factors holding back Bitcoin’s recovery.
USDT liquidity is shrinking sharply
USDT’s market cap fell to $183 billion, the lowest level since October 2025.
Analysts noted that the stablecoin’s 60-day change in market cap is around -$4 billion, approaching the lowest levels on record.
In addition, over the past 11 days alone, USDT supply has declined by nearly $870 million, which experts say points to an accelerating liquidity outflow, rather than merely a lingering effect from earlier redemptions.
CryptoQuant emphasized that stablecoins remain the primary source of liquidity in the crypto market, so their contraction has a direct impact on market conditions.
Analysts explained Bitcoin’s weakness
Experts stressed that there is no direct cause-and-effect relationship between USDT flows and Bitcoin’s price action. In their view, both metrics respond to the same risk-off conditions, when investors cut exposure to risk assets.
At the same time, they noted that historically, periods of USDT supply expansion often coincided with Bitcoin uptrends, while contractions were accompanied by weaker demand, deeper corrections, and deteriorating market liquidity.
According to analysts, the current decline in the leading cryptocurrency is unfolding amid an aggressive contraction in one of the market’s largest liquidity bases, which is why price bounces have so far failed to turn into a sustained recovery.
CryptoQuant believes that improving market conditions will require the stabilization of the 60-day change in USDT market capitalization, a slowdown in the daily contraction of supply, and a return to growth for the stablecoin.
At the same time, analysts noted that historically, periods of the deepest USDT supply contraction often coincided with phases of seller pressure exhaustion rather than its further intensification. This may indicate that the market is approaching a point after which conditions for a recovery gradually improve, although they have not yet observed signs of fresh capital inflows, the company concluded.
As a reminder, earlier Tether published its financial results for the second quarter of 2026.
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