Bitcoin’s rebound is facing a liquidity problem as Tether’s USDT lost nearly $1 billion in market capitalization over five days, according to CryptoQuant contributor MorenoDV_. The analysis warns that Bitcoin’s recovery is outpacing stablecoin supply, leaving the move more dependent on buyers already in the market.
During the 2024 and 2025 rallies, USDT’s market cap repeatedly expanded by billions of dollars over 60-day periods, creating a larger dollar pool for trading and absorbing sell pressure. This year, however, expansion has been less persistent and punctuated by deep contractions. Although the 60-day change in supply recently climbed back toward zero from midyear lows, the latest withdrawals are testing that improvement.
At the time of writing, Bitcoin was trading around $83,000, up more than 1% over 24 hours, but still 34% below its all-time high above $126,000. The 30-day performance was only modestly positive at just above 1%, meaning the rebound has yet to establish a clear recovery trend. MorenoDV_ noted that recovery from contraction is only a first step, and renewed USDT contraction weakens the case that this is turning into a broad liquidity-backed expansion.
The report does not call the situation a market-wide capital drain, as liquidity may be migrating to other stablecoins and ETF demand can reach Bitcoin through a separate route. Still, the analyst cautioned: “If supply keeps shrinking while BTC stalls, the recovery could fade before demand grows strong enough to absorb renewed selling.”
There is evidence of continued buying from large holders. According to Santiment, wallets holding 10 to 10,000 BTC have added nearly 89,000 BTC since September 19, lifting their combined balance above 13.69 million BTC, the highest in six months. Institutional buying, however, appears thinner. HashKey’s Tim Sun said spot ETFs and corporate treasuries supplied most of the marginal demand for two years, but higher borrowing costs have narrowed valuation premiums at some treasury companies, weakening their reason to keep financing purchases.
