Bitcoin sell pressure ‘closer to exhaustion’ after $4B USDT market-cap drop: CryptoQuant

Biggest stablecoin Tether (USDT) has shed $4 billion in market cap in just two months, but history suggests that the downturn is nearly over.

Key points:

• Tether’s 60-day rolling market-cap contraction stays near $4 billion in one of its heaviest drawdowns.
• Analysis suggests that the worst of bear-market selling pressure could be over as a result.
• Comparison to 2022 bear-market highlights an ongoing RSI divergence.

USDT drawdown puts “acceleration” of Bitcoin selling in doubt

Onchain analytics platform CryptoQuant in a blog post last week flagged market cap “undergoing one of its sharpest contractions on record.”

“The deterioration has also accelerated at the margin: nearly $870 million of USDT supply disappeared over the latest 11-day period, showing that the contraction is not merely a legacy effect from earlier redemptions,” analysts wrote. 

CryptoQuant data puts the 30-day simple moving average (SMA) of 60-day USDT market-cap change at minus $4.88 billion as of Aug. 10. 

USDT 60-day market-cap change vs. BTC/USD. Source: CryptoQuant

The extent of the drawdown echoes crypto bear markets and rivals the largest ever seen. Its severity has implications for Bitcoin and the broader market recovery. Stablecoins provide a key source of liquidity, and when this evaporates, less capital or “dry powder” is available for deployment, showing a lack of interest among investors in stepping in at a given price.