Bitcoin Selling Pressure Nears Exhaustion as USDT Market Cap Drops $4 Billion in 60 Days

Tether’s USDT market capitalization has shrunk by about $4 billion over the past two months, suggesting Bitcoin selling pressure may be nearing exhaustion rather than intensifying further.

Cointelegraph reported on Aug. 11 that CryptoQuant sees USDT market capitalization as passing through one of the steepest contraction periods on record. As of Aug. 10, the 30-day simple moving average tracking the 60-day change in USDT market capitalization stood at negative $4.88 billion.

The decline has continued in recent days. In the past 11 days alone, about $870 million of USDT supply has disappeared, a drop CryptoQuant said is difficult to explain through redemptions alone.

A decline in USDT supply points to tighter liquidity in the crypto market. With less sidelined capital available to flow into the market, the trend can signal weak new demand for digital assets including Bitcoin.

CryptoQuant said past episodes show the sharpest contractions in USDT supply tended to coincide with the later stages of market downturns. The 60-day drop in USDT market capitalization bottomed at negative $5.72 billion on July 13.

Historically, periods of the steepest USDT supply contraction were closer to the exhaustion of selling pressure than to a further acceleration in selloffs, CryptoQuant said.

Cointelegraph also reported a bullish divergence between Bitcoin’s price and its weekly relative strength index, or RSI. It said the pattern resembles the end of the 2022 bear market, fueling speculation that Bitcoin could form a macro bottom before the end of this year.