USDT Contraction Sparks Liquidity Crisis Concerns

The cryptocurrency market is currently facing a significant liquidity crisis, with the 60-day USDT market cap contraction dropping below -$3 billion for only the second time in history.

Historical data shows that this signal has appeared twice before: once in late 2022 when Bitcoin bottomed near $16,000, and again now in early 2026. Each instance has been accompanied by sharp price movements and volatility in Bitcoin's price.

The current liquidity crisis is characterized by sustained capital outflows and structural tightening in crypto-native liquidity. This environment creates a fragile situation for price stability, with potential risks of further downside pressure if the trend continues.