Approaching historical extreme negative levels, USDT market cap has decreased by approximately $4 billion over the past 60 days

Odaily News, CryptoQuant analyst Moreno stated that USDT liquidity is experiencing one of the most severe contraction phases in its history. The 60-day change in USDT market cap has fallen to approximately -$4 billion, nearing historical extreme negative levels. Meanwhile, liquidity contraction is still accelerating, with USDT supply decreasing by approximately $870 million over the past 11 days, indicating this is not merely a lagged effect of earlier redemptions.

Stablecoins are the most direct source of available liquidity in the crypto market. Sustained USDT expansion is typically accompanied by stronger BTC price performance, while prolonged contraction phases often correspond to weak demand, market pullbacks, and declining risk appetite. However, the correlation between USDT flows and BTC price does not prove direct causation—both may be simultaneously influenced by risk-aversion sentiment, with redemption pressure and spot selling occurring in tandem. The current BTC decline is not an isolated event but is occurring against the backdrop of one of the market's primary liquidity sources steadily shrinking, which also explains why recent bounces have been difficult to sustain. To improve market conditions, we need to see the 60-day change in USDT stabilize, daily supply contraction slow, and a return to an expansion phase.