Bitcoin (BTC) has again slipped beneath the $90,000 threshold during early Asian trading hours, despite some favorable macroeconomic indicators. An analyst has pointed to a significant decrease in stablecoin inflows as a crucial element contributing to Bitcoin”s persistent weakness, emphasizing that new liquidity is essential for a potential bullish rally.
Data from BeInCrypto Markets reveals that December has been marked by heightened volatility for the leading cryptocurrency. This follows two consecutive months of losses, with November recording Bitcoin”s steepest monthly decline of the year. Currently, BTC is trading at $89,885, reflecting a 2.7% decrease over the last 24 hours. This decline occurs in the wake of the Federal Reserve”s recent decision to reduce interest rates for the third time this year, lowering rates by 25 basis points to a target range of 3.50%–3.75%. Such rate cuts are generally perceived as bullish for the cryptocurrency market, leading many to anticipate a price rebound. However, contrary to expectations, prices have instead trended downward.
The analyst, known as Darkfost, has identified liquidity as the primary factor hindering Bitcoin”s recovery. He noted that stablecoin inflows to exchanges have plummeted from $158 billion in August to roughly $76 billion today, representing a staggering 50% decline over several months. The 90-day moving average has also decreased from $130 billion to $118 billion, indicating a clear downward trajectory.
Darkfost commented, “One of the main reasons why Bitcoin is struggling to recover right now is the lack of incoming liquidity. When we talk about liquidity in the crypto market, we”re primarily referring to stablecoins.” The drop in stablecoin inflows suggests a weakening demand, leaving Bitcoin vulnerable to ongoing selling pressure without the support of new capital.
Moreover, BeInCrypto has reported that while stablecoin issuers are still minting new tokens, the market capitalizations of significant assets like Tether (USDT) and Circle“s USDC have reached new highs this month, much of this supply is being absorbed by cross-border payment demands. Additionally, a considerable portion of the inflows is directed towards derivatives exchanges instead of spot platforms.
The International Monetary Fund (IMF) recently noted that Asia accounts for the largest volume of stablecoin activity, surpassing North America. However, when considering gross domestic product, regions like Africa, the Middle East, and Latin America exhibit notable activity levels. The majority of stablecoin flows are moving from North America to other regions.
This current decline in Bitcoin”s price underscores the reality that macroeconomic catalysts alone are insufficient to drive market movements. The data indicates that a resurgence of stablecoin liquidity is critical for a sustained bullish reversal. Additionally, market sentiment plays a vital role; fearful behavior and low engagement are hindering the rotation of capital into Bitcoin.
