Analyst Moreno said the stablecoin's supply shrinkage has reached a record contraction pace, a backdrop that may help explain weaker Bitcoin rebounds and softer risk appetite.
USDT liquidity is going through one of its sharpest contraction phases on record, according to CryptoQuant analyst Moreno, with the stablecoin's market capitalization down by around $4 billion over the past 60 days in what he described as the largest contraction on record. The pullback is still accelerating: about $870 million USDT has been removed from supply over the past 11 days, suggesting the market's most immediately deployable pool of crypto liquidity is shrinking quickly. In crypto markets, stablecoins are a key source of deployable liquidity, and sustained USDT growth has often coincided with stronger Bitcoin price action, while prolonged contraction has typically aligned with weaker demand, market pullbacks and lower risk appetite. Moreno said there is no direct causal relationship between shrinking USDT supply and Bitcoin's price decline, since both can reflect broader risk-off conditions. Based on historical data, he added that extended declines in USDT market capitalization have at times appeared closer to points of selling exhaustion than to signals of further downside, even if lower USDT liquidity may have limited Bitcoin's ability to sustain rebounds.