USDT market cap decline signals shrinking crypto market liquidity

On-chain analyst Moreno said Tether’s USDT, the world’s largest stablecoin, has remained in a declining market-cap trend, signaling that liquidity in the crypto market is drying up. Moreno said USDT’s 60-day market-cap change has fallen to around negative $4 billion, marking the largest contraction on record. Over the past 11 days, about 870 million USDT has been removed from supply, accelerating the decline in market capitalization, Moreno added. Moreno said USDT is the most immediately deployable source of liquidity in the crypto market, meaning market liquidity is being depleted rapidly. Moreno added there is no direct causal relationship between shrinking USDT supply and a decline in Bitcoin’s price. Based on historical data, Moreno said prolonged declines in USDT market capitalization have at times appeared closer to points of selling exhaustion than to signs of additional downside pressure. Still, Moreno said lower USDT liquidity may have affected Bitcoin’s ability to sustain a rebound.