Bitcoin near a bottom? The strange signal sent by USDT

USDT lost nearly 4 billion dollars in market capitalization over 60 days. On paper, this is bad for Bitcoin: fewer stablecoins means less liquidity available to buy. Yet, CryptoQuant also sees a possible seller exhaustion signal. The market lacks fuel, but it might soon lack sellers.

In Brief

Bitcoin absorbs a rarely seen liquidity contraction

The 60-day variation in USDT market capitalization is moving at extreme levels. This contraction comes as several analysts begin to consider a bottom for Bitcoin, after the BTC drop below 60,000 dollars at the beginning of July. The 30-day moving average of this variation was about -4.88 billion dollars on Monday. The low dates back to July 13, with -5.72 billion over 60 days. More recently, nearly 870 million additional dollars left the USDT supply in eleven days.

This is not just a detail. Stablecoins serve as a holding tank for the crypto market. An investor can sell Bitcoin, stay in USDT, then quickly return to BTC. When stablecoin supply decreases, part of this liquidity completely leaves the ecosystem. The classic interpretation is thus bearish. Less USDT available means less capital immediately available to support a rebound.