Analysis: USDT Market Capitalization Sees Largest Decline on Record, BTC Rebound Faces Liquidity Crunch Pressure

BlockBeats News, August 5th, CryptoQuant analyst Moreno posted that USDT liquidity is undergoing one of the most severe contraction phases in history.

The market capitalization of USDT has decreased by nearly $4 billion in the past 60 days, approaching its historical lowest level. At the same time, the liquidity contraction is still accelerating, with the USDT supply decreasing by approximately $870 million in the past 11 days, indicating that this is not simply a lagging effect caused by previous redemptions.

Stablecoins are the most direct source of available liquidity in the crypto market. The continuous expansion of USDT is usually accompanied by a stronger BTC price performance, while a long-term contraction phase often corresponds to weak demand, market corrections, and a decrease in risk appetite. However, the correlation between USDT outflows and BTC prices does not prove a direct causal relationship. Both may be influenced by risk aversion sentiment, with redemption pressure coinciding with spot selling.

The current BTC decline is not an isolated event but is occurring against the backdrop of one of the market's major liquidity sources continuing to shrink. This also explains why the recent rebound has been difficult to sustain. To improve the market environment, it is necessary to see the stabilization of the 60-day USDT changes, a slowdown in daily supply contraction, and a return to the expansion phase.