CryptoQuant: Bitcoin selling pressure nearing end following $4B Tether market cap decline
Historical data shows Bitcoin typically experiences the most intense bear-market selling pressure following "prolonged contractions" in the USDT market capitalization, according to recent analysis.
The leading stablecoin by market capitalization, Tether (USDT), has experienced a $4 billion reduction in its total market cap over a mere two-month span, yet historical patterns indicate the downturn may be approaching its conclusion.
Key points:
- The 60-day rolling contraction in Tether's market capitalization remains close to $4 billion, representing one of the most significant drawdowns recorded.
- Market analysis indicates the most severe phase of bear-market selling pressure may have concluded as a consequence.
- An ongoing RSI divergence pattern emerges when compared to the 2022 bear market cycle.
USDT drawdown casts doubt on "acceleration" of Bitcoin sell-off
In a blog post published last week, onchain analytics platform CryptoQuant identified the market cap as "undergoing one of its sharpest contractions on record."
"The deterioration has also accelerated at the margin: nearly $870 million of USDT supply disappeared over the latest 11-day period, showing that the contraction is not merely a legacy effect from earlier redemptions," analysts wrote.
According to CryptoQuant's data, the 30-day simple moving average (SMA) measuring the 60-day USDT market-cap change stood at minus $4.88 billion on Aug. 10.
The magnitude of this drawdown mirrors previous crypto bear markets and compares to the most significant contractions ever recorded. The severity of this decline carries important implications for Bitcoin's trajectory and the wider market's potential recovery. Stablecoins serve as a critical liquidity source, and when this liquidity disappears, reduced capital or "dry powder" remains available for market deployment, demonstrating investor reluctance to enter positions at current price levels.
"The caution is that correlation between USDT flows and BTC price doesn't settle causality. Both likely respond to the same risk-off conditions, with redemptions accelerating alongside spot selling rather than strictly ahead of it," CryptoQuant analysts said. They added:
"Periods of sustained USDT expansion have generally coincided with stronger Bitcoin price regimes, while prolonged contractions have accompanied weaker demand, deeper corrections, and deteriorating market conditions."
The most severe 60-day contraction period for USDT market capitalization concluded on July 13, at which point it registered minus $5.72 billion.
Taking a broader perspective, CryptoQuant observes that the most dramatic contraction phases have historically emerged during the concluding stages of macro market downturns.
"Historically, the market's deepest USDT contraction phases have also marked points where selling pressure was closer to exhaustion than to further acceleration," it added.
Weekly RSI divergence mirrors 2022 reversal pattern
These findings contribute to the growing collection of evidence suggesting the current bear market cycle is approaching its final phase.
As Cointelegraph continues to report, consensus among market participants increasingly favors a new Bitcoin macro bottom forming before the end of 2026. Both comparisons to previous bear markets and onchain indicators, however, see the downturn continuing in the short term.
Independent analyst William Clemente's Aug. 8 BTC outlook echoed the prognosis while describing the Bitcoin network as "fundamentally healthy."
"I think Bitcoin is 'cheap' although we could have a leg lower at some point throughout the year," he summarized.
His subsequent X post highlighted an unfolding bullish divergence between BTC/USD and the relative strength index (RSI) on weekly time frames — a classic leading indicator for a market reversal which accompanied the end of the 2022 bear market.
