Wintermute "Virtual asset market enters 'recycled liquidity' phase"

Global cryptocurrency market maker Wintermute diagnosed that the growth engine of the virtual asset (cryptocurrency) market has slowed, and analyzed that the market is currently being sustained not by external funds but by 'recycled liquidity'.

On the 6th (local time), according to CoinDesk, Wintermute said on its blog, "Inflows into stablecoins, exchange-traded funds (ETFs), and digital asset treasuries (DATs) have all entered a stagnation phase," adding, "This means the virtual asset market has entered a 'self-funded phase' in which it operates solely on its own capital circulation."

It continued, "Liquidity is the key variable that determines all virtual asset market cycles," and pointed out, "Despite the spread of blockchain technology, the pace of new capital inflows has noticeably slowed in recent months."

According to data shared by Wintermute, since 2024 the size of ETFs and digital asset treasuries expanded from $40 billion to $270 billion, and stablecoin issuance expanded about twofold to $290 billion. However, it explained that these growth trends have stalled this year, solidifying the cyclical structure of market liquidity.

Wintermute analyzed that this slowdown is not due to tight monetary policy. The firm emphasized, "Global M2 (broad money) remains accommodative, and major central banks have begun cutting rates after two years of tightening," and "the issue is where liquidity is flowing."