Bitcoin Sell Pressure Closer to Exhaustion After $4B USDT Market-Cap Drop
Vexoda Newsroom
CryptoQuant analysis suggests that the worst of bear-market selling pressure on Bitcoin may be over, following a significant contraction in Tether’s market cap. This could indicate an upcoming recover
In recent weeks, the largest stablecoin Tether (USDT) has experienced one of its most severe contractions in market capitalization, shedding $4 billion over just two months. According to onchain analytics platform CryptoQuant, this significant drawdown is a potential indicator that bear-market selling pressure on Bitcoin might be nearing an end.
The analysis highlights the importance of Tether as a key liquidity provider for cryptocurrencies like Bitcoin. A decline in USDT’s market cap suggests reduced investor interest and less capital available to support price movements. However, CryptoQuant notes that correlation between USDT flows and BTC prices does not imply causation; both are likely influenced by broader risk-off conditions.
Historical data from 2022 bear markets also supports this view, showing a divergence in the Relative Strength Index (RSI) for Bitcoin. Independent analyst William Clemente observed an unfolding bullish RSI divergence on weekly charts, similar to what occurred at the end of the previous bear market. This pattern suggests that a new macro bottom could form for Bitcoin before the end of 2026.
While the current downturn is expected to continue in the short term, longer-term indicators suggest a potential recovery. The steepest USDT contraction period completed on July 13, and CryptoQuant data indicates that historically, such contractions have marked points where selling pressure was closer to exhaustion than further acceleration.
These findings add weight to the growing consensus among market participants that a new macro bottom for Bitcoin is likely forming. However, traders should remain cautious as both comparisons to previous bear markets and onchain indicators suggest continued short-term volatility before any significant recovery could occur.
Traders are advised to keep an eye on further developments in USDT’s market cap and RSI divergences, which may provide additional signals for when the current downturn is nearing its end. Independent research remains crucial as all investments carry risk.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.