The top stablecoin, $USDT, has recently shown a rare market signal. In this respect, the 60-day market capitalization change of $USDT has dropped below the -$3B mark. As per the data from CryptoQuant, this development mirrors the outlook seen back in the Bitcoin ($BTC) bottom of 2022. At that time, $BTC bottomed around $16,000 after forced selling due to extreme fear.

USDT Just Triggered a Signal Seen Only at the 2022 Bottom

“Extreme liquidity stress has historically marked opportunity, but only once selling exhaustion is confirmed.” – By @MorenoDV_ pic.twitter.com/xxGJgQziEF

The exclusive market data suggests that the simultaneous market cap shift of $USDT and Bitcoin presents a striking resemblance to the market outlook during 2022’s $BTC market bottom. Specifically, the 60-day market cap contraction of $USDT presents a sheer drop of $3.14B. The development, echoing that $BTC bottom signal, underscores the reflective connection between Bitcoin performance and liquidity. Based on historical data, $USDT redemptions many a time exceeded the -$1B spot. Specifically, in mid-2024, the top stablecoin saw a -$1.22B contraction within a single day, marking a volatility cluster.

Apart from that, last year, $USDT also recorded -$1.14B outflow. Such episodes reportedly signify heightened turbulence or local bottoms in the case of Bitcoin ($BTC). Additionally, these massive redemptions often signify forced liquidations or institutional exits. Particularly, such developments take place around exhaustion points instead of at the beginning of extended downturns.

According to CryptoQuant, $USDT and other such stablecoins serve as the “dry powder” for crypto sector. It represents capital reserves to rapidly exit or enter the market. Increasing $USDT supply indicates new inflows, whereas contraction suggests liquidity withdrawal, forced redemptions, or a risk-off sentiment. At the moment, while $BTC is trading within the $65K-$70K range, the market is sitting in a crucial juncture, with institutions and traders closely watching whether the rare contraction signal of $USDT will again lead to a bottom.

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