[Analysis: USDT Market Cap Decline Reaches Historical Extreme Levels, BTC Rebound Faces Liquidity Contraction Pressure] BlockBeats News, August 5 — CryptoQuant analyst Moreno stated in a post that USDT liquidity is undergoing one of the most severe contraction phases in history. The 60-day change in USDT market cap has dropped by approximately $4 billion, nearing historically negative levels. Meanwhile, the liquidity contraction is still accelerating, with USDT supply decreasing by about $870 million over the past 11 days, indicating that this is not merely a lagging effect caused by previous redemptions. Stablecoins are the most direct source of available liquidity in the crypto market. USDT's continuous expansion is typically accompanied by stronger BTC price performance, while prolonged contraction phases often correspond to weak demand, market corrections, and declining risk appetite. However, the correlation between USDT flows and BTC prices does not prove a direct causal relationship; both may be jointly influenced by risk-averse sentiment, with redemption pressure and spot selling occurring simultaneously. The current BTC decline is not an isolated event but is happening against the backdrop of a sustained contraction in one of the market's primary liquidity sources. This also explains why recent rebounds have struggled to sustain momentum. To improve market conditions, it is necessary to see the 60-day USDT change stabilize, daily supply contraction slow down, and a return to an expansion phase. [Original Link]