Analyst: USDT Market Cap Shrinks Significantly, Bitcoin Faces Pressure from Tightening Liquidity

TechFlow news, August 05, CryptoQuant analyst Moreno stated in a post that data shows USDT market cap is undergoing a relatively severe contraction phase historically, with 60-day market cap change approximately decreasing by $4 billion, approaching historical low ranges. Within the past 11 days, USDT supply further decreased by approximately $870 million, indicating the contraction trend continues.

Stablecoins are typically regarded as the most direct source of deployable liquidity in the crypto market. USDT supply contraction means the capital base available in the market to absorb spot buy orders is weakening, which is also one of the key contextual factors for the insufficient sustainability of Bitcoin's rebound. However, the relationship between USDT capital flows and Bitcoin price reflects more of a correlation than an absolute causal relationship. Both may be simultaneously affected by rising risk-off sentiment, meaning stablecoin redemptions and spot selling occur simultaneously. Historically, continuous USDT expansion usually corresponds to stronger Bitcoin trends, while continuous contraction often accompanies weakening demand, deepening corrections, and deteriorating market conditions. However, in some extreme contraction phases, selling pressure may also be nearing exhaustion.

Overall, Bitcoin's current recovery rally is facing a tightening liquidity environment. Only if USDT 60-day change stabilizes, daily contraction slows down, and supply growth resumes, may market sentiment and price performance show clearer improvement.