CryptoQuant contributor MorenoDV_ warns in a new analysis that Bitcoin’s rebound is outrunning stablecoin supply, as Tether’s USDT lost nearly $1 billion in market capitalization in five days.
With less fresh dollar supply entering the market, the recovery leans more heavily on buyers already in it.
USDT Supply Is Lagging Bitcoin’s Rebound
Bitcoin’s recovery “is facing a liquidity problem,” the analysis states, because USDT is struggling to return to sustained expansion.
During the 2024 and 2025 rallies, the stablecoin’s market capitalization repeatedly grew by billions of dollars across 60-day periods, adding to the dollar pool available for trading and for absorbing sell pressure. Issuance alone never guaranteed Bitcoin purchases, but it gave demand a more supportive backdrop.
This year, expansion has been less persistent and has been cut short by deep contractions. The 60-day change in supply recently climbed back toward zero from its midyear lows, but the latest withdrawals are testing that improvement.
Bitcoin was trading around $83,000 per data from CoinGecko at the time of writing, up by more than 1% in the last 24 hours. It remained 34% below its all-time high of over $126,000, while its 30-day performance was modestly positive at just above 1%. The rebound has therefore yet to establish a clear recovery trend.
A recovery from contraction is just the first step, the analysis noted. According to the market watcher, if selling pressure reduces or capital rotates back in, Bitcoin can recover, but it’s harder for the move to extend without fresh liquidity building up alongside it, particularly if higher prices tempt holders to take profits.
Simply put, Bitcoin has recovered faster than the USDT backdrop, and a source of support for previous advances now offers far less.
The report stops short of calling this a market-wide capital drain. Liquidity may be migrating to other stablecoins, and ETF demand can reach Bitcoin through a separate route. Even so, renewed USDT contraction weakens the case that the recovery is turning into a broad expansion backed by liquidity.
For that case to improve, daily contractions would need to fade, and the 60-day change would need to move decisively above zero, backed by strong spot buying. “If supply keeps shrinking while BTC stalls,” the analyst wrote, the recovery could fade before demand grows strong enough to absorb renewed selling.
Whale Buying Offsets Cooling ETF and Treasury Demand
There is evidence of continued buying from large holders, with wallets holding 10 to 10,000 BTC having added nearly 89,000 BTC since September 19, according to Santiment, lifting their combined balance above 13.69 million BTC, the highest in six months.
But institutional buying is thinner. HashKey’s Tim Sun explained that spot ETFs and corporate treasuries supplied most of the marginal demand for two years, and that higher borrowing costs have narrowed valuation premiums at some treasury companies, weakening their reason to keep financing purchases.
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