Crypto Market Liquidity Shrinks Ahead of Holidays
Cryptocurrency market liquidity is tightening, with a sharp slowdown in capital inflows marked by a drop in Tether’s 60-day market cap change from $15.38 billion to $4.83 billion since November 1. Stablecoin supply has stalled, reflecting cautious capital deployment and a contraction typical ahead of the holiday season. Stablecoin exchange reserves, a sign of available capital, recently peaked at $80 billion before falling 11% and then ticking up slightly. While undeployed “dry powder” exists, capital is hesitating, either waiting for lower prices or rotating short-term. This environment limits potential market gains. Bitcoin’s liquidity remains relatively resilient but is weakening, with upside capped without new ETF demand or expansion of stablecoins. Altcoins, which depend more heavily on capital rotation, are even more susceptible to tight liquidity. Market watchers expect continued price consolidation, with Bitcoin likely to trade between its “true mean” ($81,000) and short-term holder cost basis ($102,000), until a breakout in either direction. Despite overall caution, many traders remain optimistic, giving a 64% probability of Bitcoin retesting $100,000.
