June saw a sharp decline in supply growth for the stablecoin Tether (USDT), reflecting reduced liquidity in cryptocurrency markets.
A report from cryptocurrency custodian Copper shows that the monthly supply of stablecoins increased by less than 1.5% as of June 24, a significant decline from the more than 5% seen in April and May. According to Cooper’s research director, Fadi Abu Alfa:
“This suggests that less liquidity is circulating in crypto markets as Bitcoin and Ethereum face downward pressure, and altcoins remain far behind with little hope of a significant upside in the near term.”
Tether trading volume fell from its record high on March 11, when USDT trading activity peaked at $767.22 billion, to $53.55 billion on June 24. With a market capitalization of $113 billion, slower growth in the supply of USDT indicates that less money is flowing into cryptocurrency markets.
Bitcoin markets have seen large daily outflows recently, with more than $540 million leaving the market last week, according to Cooper’s analysis. Over the past 30 days, the price of Bitcoin (BTC) has fallen more than 10%, from around $68,000 to around $62,000 at the time of writing. Abu Al-Laffa explains:
“As markets focus on ETF dynamics, the price of Bitcoin follows a uniform trajectory relative to these flows. While this is not a measure of bullish demand, it does indicate whether investors are less enthusiastic about unloading their Bitcoin at a discount, even if they anticipate a collapse.
Since exchange-traded funds (ETFs) began trading in January, the price of Bitcoin has increased by 37%. “Bitcoin is still trading within acceptable limits relative to holdings, indicating room for downward pressure,” Abu Alfa said.
Macroeconomic forecasts
Cryptocurrency markets are under pressure from the macroeconomic landscape. A June 25 report from ETC Group suggests that traditional financial markets are beginning to “price in” global growth expectations.
“A major factor in the downward revision of global growth expectations is the continued disappointment of US economic data relative to expectations,” the analysis said.
The U.S. Bloomberg Economic Surprise Index, which measures differences between actual macroeconomic data and expected figures, fell to its lowest level since 2019, the report said: “This decline indicates widespread recognition of the deterioration of the macroeconomic environment”.
According to ETC Group, continued declines in global growth expectations, coupled with growing recession risks in the United States, could remain a challenge for Bitcoin price.
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