USDT supply is shrinking faster than during the FTX collapse, and the stablecoin “ammunition” is running low.
According to BlockBeats, the circulating supply of USDT is shrinking rapidly, at a faster rate than during the FTX collapse. Stablecoins are the ammunition for capital in the market. A decline in supply means capital is exiting or moving to the sidelines, not signaling that it is adding to positions.
USDT supply contractions typically coincide with net outflows from exchanges, deleveraging, and declining risk appetite. During the FTX crisis, USDT supply fell sharply, followed by a prolonged period of deleveraging. This time, the contraction is happening more rapidly, suggesting that capital is being withdrawn faster than it was then. The overall direction is bearish for risk assets, with a focus on BTC and ETH’s near-term ability to find support. As liquidity contracts, low-volume rebounds are less likely to last and can easily be reversed. Those with positions should reduce leverage and manage drawdowns rather than go all-in on dips.
Scenario to watch 1: If USDT supply continues to decline over the next few days and stablecoin balances on exchanges fall in tandem, any rebound is likely to be a recovery rather than a reversal. Scenario to watch 2: A resumption of supply growth would be the confirmation signal that capital is flowing back in.
Would you rather keep an eye on changes in USDT supply or stablecoin balances on exchanges?
Image 1: USDT supply shrinking faster than during the FTX collapse — Liquidity Alert · Key News
Image source: https://www.theblockbeats.info/flash/376625
According to BlockBeats, the circulating supply of USDT is shrinking rapidly, at a faster rate than during the FTX collapse. Stablecoins are the ammunition for capital in the market. A decline in supply means capital is exiting or moving to the sidelines, not signaling that it is adding to positions.
USDT supply contractions typically coincide with net outflows from exchanges, deleveraging, and declining risk appetite. During the FTX crisis, USDT supply fell sharply, followed by a prolonged period of deleveraging. This time, the contraction is happening more rapidly, suggesting that capital is being withdrawn faster than it was then. The overall direction is bearish for risk assets, with a focus on BTC and ETH’s near-term ability to find support. As liquidity contracts, low-volume rebounds are less likely to last and can easily be reversed. Those with positions should reduce leverage and manage drawdowns rather than go all-in on dips.
Scenario to watch 1: If USDT supply continues to decline over the next few days and stablecoin balances on exchanges fall in tandem, any rebound is likely to be a recovery rather than a reversal. Scenario to watch 2: A resumption of supply growth would be the confirmation signal that capital is flowing back in.
Would you rather keep an eye on changes in USDT supply or stablecoin balances on exchanges?
Image 1: USDT supply shrinking faster than during the FTX collapse — Liquidity Alert · Key News
Image source: https://www.theblockbeats.info/flash/376625
