USDT Market Cap Drops $4B in 60 Days, Signaling Liquidity Contraction

USDT supply shrinks $4B over 60 days and $870M in 11 days, accelerating contraction. This liquidity drain pressures BTC rebound sustainability amid weak risk appetite.

Woofun AI data shows that USDT market capitalization has declined by approximately $4 billion over the past 60 days, approaching historically low levels. The contraction is accelerating, with a further $870 million reduction in supply recorded in the last 11 days, indicating this trend extends beyond lagging effects from prior redemptions.

Analyst Moreno notes that stablecoins serve as the primary source of crypto market liquidity. While USDT expansion typically correlates with stronger BTC performance, prolonged contraction aligns with weak demand and declining risk appetite. The correlation does not imply direct causation, as both metrics may reflect concurrent risk-averse sentiment and spot selling. The current difficulty in sustaining BTC rebounds stems from this shrinking liquidity base, requiring stabilization in USDT supply to improve market conditions.