Bitcoin slipped below $65,000 during early Asian trading hours as renewed tariff tensions weighed on broader risk sentiment. As the largest cryptocurrency extends its downtrend, Tether’s USDT has flashed a signal that has appeared only once before.
The move raises questions over whether this marks a major market turning point or signals further downside pressure ahead.
Crypto’s “Dry Powder” Is Shrinking: What USDT Contraction Means for BTC
In a recent post, analyst Moreno noted that the 60-day market cap change for USDT dropped below -$3 billion. According to his analysis, this threshold has been breached only once before.
This happened during the late 2022 bear market, when Bitcoin was bottoming near $16,000 amid widespread fear and forced selling.
The same metric has now reached similar levels again. This comes at a time when Bitcoin is trading in the $65,000 to $70,000 range following a prior all-time high (ATH) rally.
Stablecoins serve as the “dry powder” of the crypto ecosystem. When USDT supply expands, it generally reflects new capital entering exchanges and risk assets.
When supply contracts, it indicates forced redemptions, risk-off behavior, or investors moving funds out of the system. Over a 60-day window, a multibillion-dollar contraction signals sustained liquidity withdrawal rather than a short-term fluctuation.
“For Bitcoin, a reflexive, liquidity-sensitive asset, this matters deeply,” the post read.
Moreno also highlighted that, on a daily basis, USDT has recorded three instances in which net outflows exceeded $1 billion in a single session. The episodes of that magnitude have clustered around periods of intense volatility or local market bottoms in Bitcoin.
In his view, such redemptions often reflect institutional or large-holder exits from the ecosystem. He explained that these dynamics tend to occur closer to exhaustion phases than at the beginning of prolonged declines.
Still, Moreno does not present the signal as inherently bullish. He emphasized that context remains critical. According to him,
“In previous cycles, once forced deleveraging completed and USDT flows stabilized, Bitcoin transitioned into strong medium-term upside as liquidity conditions normalized.”
Moreno added that the current risk-reward profile depends on whether that stabilization materializes. If the contraction in USDT supply continues, downward pressure could persist.
“If flows flatten or reverse, the asymmetry shifts rapidly in favor of upside. Extreme liquidity stress has historically marked opportunity, but only once selling exhaustion is confirmed,” he concluded.
Bitcoin’s Next Major Bottom Could Arrive in Late 2026, Analysts Suggest
While liquidity metrics are flashing stress signals, some analysts argue that Bitcoin’s broader market structure suggests the bottom may still be months away.
One analyst forecasted that the next major bottom could be approximately 230 to 240 days out. Based on that framework, the projected window for a macro low falls between October 11 and October 21, 2026.
“Until the cycle completes, rallies may remain relief bounces, not a confirmed macro reversal,” the analyst stated.
Another market observer similarly pointed to November 2026 as a potential timeframe for the cycle bottom. If those projections hold, it would imply that Bitcoin may still have further downside before a full structural recovery begins.
However, cycle models are probabilistic rather than predictive. While historical timing frameworks provide structure, external variables can accelerate or delay expected turning points.
Source: https://beincrypto.com/bitcoin-usdt-liquidity-signal-market-bottom-risk/