Odaily Planet Daily report: CryptoQuant analyst Moreno stated that USDT liquidity is undergoing one of the most severe contraction phases in history. The USDT market cap has decreased by approximately $4 billion over the past 60 days, nearing its most negative level on record. Meanwhile, the liquidity contraction is still accelerating, with USDT supply declining by about $870 million over the past 11 days, indicating this is not merely a lagged effect from prior redemptions.
Stablecoins are the most direct source of liquidity in the crypto market. The continued expansion of USDT is typically accompanied by stronger BTC price performance, while prolonged contraction phases often correspond to weak demand, market corrections, and reduced risk appetite. However, the correlation between USDT flows and BTC price does not prove direct causation; both may be jointly influenced by risk-averse sentiment, with redemption pressure occurring simultaneously with spot selling. The current BTC decline is not an isolated event but occurs against the backdrop of sustained contraction in one of the market’s primary liquidity sources, which also explains why recent rebounds have struggled to gain momentum. To improve market conditions, we need to see the 60-day change in USDT stabilize, a slowdown in daily supply contraction, and a return to an expansion phase.