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Guavy AI Editorial Team••Sentiment: -3•Clout: 60

USDT Reserve Decline Sparks Crypto Market Liquidity Concerns

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The crypto market is experiencing a significant liquidity crisis due to a substantial decrease in USDT reserves on exchanges. According to CryptoQuant's data, the total outflow has amounted to around $9 billion over two months, with reserves dropping from approximately $60 billion to about $51.1 billion.

This decline in USDT reserves is associated with the weak market performance in January and February. Analysts have identified a critical threshold of $50 billion for USDT reserves, below which they predict strong selling pressure and a deeper correction in major assets such as bitcoin, Ethereum, and XRP.

CryptoQuant's research also indicates that on-chain activity is weakening, with the number of active addresses decreasing from 376,000 to 263,000. This decline points to reduced activity among both retail and institutional participants.