In June, the supply of Tether (USDT) stablecoin saw a sharp decline, reflecting a decrease in cryptocurrency market liquidity.
A report from cryptocurrency custody firm Copper showed that as of June 24, the supply of stablecoins had grown by less than 1.5% compared to the 5% or more growth in April and May. Fadi Aboualfa, the head of research at Copper, stated: “This indicates that as Bitcoin and Ethereum face downward pressure, liquidity entering the cryptocurrency market is decreasing, and hopes for a significant rebound in the short term are slim, with altcoins still lagging far behind.”
Tether’s trading volume plummeted from its historical peak of $767.2 billion in USDT trading activity on March 11 to $53.5 billion on June 24. Despite USDT’s market capitalization of $113 billion, the slowing growth in USDT supply indicates a decrease in funds flowing into the cryptocurrency market.
According to Copper’s analysis, there has been a significant outflow of funds from the Bitcoin market, with over $540 million leaving the market last week. In the past 30 days, the price of Bitcoin has dropped by over 10% from around $68,000 to about $62,000 at the time of writing. Aboualfa explained: “As the market focuses on ETF dynamics, the price of Bitcoin follows a unified path relative to these flows. Although this is not a measure of bullish demand, it indicates whether investors are less inclined to sell Bitcoin at a discount, even if they expect a crash.”
Since the trading of Exchange-Traded Funds (ETFs) began in January, the price of BTC has risen by 37%. Aboualfa stated: “Relative to holdings, Bitcoin is still trading within acceptable lows and highs, indicating downward pressure.”
Market Macro Outlook
The cryptocurrency market is facing pressure from macroeconomic conditions. A report from ETC Group on June 25 indicated that traditional financial markets have begun to “price in” global growth expectations. “A key factor in the downward revision of global economic growth expectations is the disappointment of US economic data relative to expectations,” the analysis said.
The report pointed out that the Bloomberg US Economic Surprise Index, which measures the difference between actual macroeconomic data and forecasted data, has fallen to its lowest level since 2019. “This decline suggests that people generally acknowledge that the macroeconomic environment is deteriorating.”
ETC Group stated that the continuous downward revision of global growth forecasts, along with rising risks of a US economic recession, may continue to pose challenges to the price of Bitcoin.
