Stablecoin Supply Decline Threatens Bitcoin (BTC) Rally as Capital Exits Crypto

The aggregate market capitalization of leading stablecoins has contracted significantly, signaling a substantial outflow of capital from the cryptocurrency ecosystem. This reduction in stablecoin liquidity, often referred to as "dry powder" for crypto purchases, poses a potential headwind for Bitcoin's (BTC) recent price recovery. Major dollar-pegged tokens like Tether (USDT) and USD Coin (USDC) have seen their combined supply shrink, reflecting decreased investor appetite to hold crypto-denominated assets. Analysts highlight that a shrinking stablecoin pool can limit buying pressure, making it more challenging for Bitcoin to sustain its upward momentum. This trend is closely monitored as a key on-chain metric for assessing market liquidity and investor sentiment.