Bitcoin faces $70,000 test as $14.2 billion stablecoin contraction exposes demand weakness
Bitcoin is facing a fresh liquidity squeeze as stablecoin supply has contracted by $14.2 billion over the past month, its sharpest decline since June 2022.
The deterioration has left Bitcoin vulnerable to another decline toward $70,000, with investors who purchased at higher prices potentially adding to selling pressure if a recovery fails to attract fresh capital. The retreat in stablecoin supply marks a sharp reversal from the conditions that supported Bitcoin's previous rally.
Stablecoin supply contracts sharply
According to Glassnode's Nov. 11 report, the aggregate supply of dollar-linked tokens declined by $14.2 billion over 30 days, the fastest contraction since the 2022 market crisis. This corroborates CryptoQuant's earlier research, which showed that Tether's USDT had lost $6.6 billion in market capitalization over 60 days, more than twice the $3.2 billion decline recorded following FTX's collapse in December 2022.
The reversal is particularly striking against the liquidity expansion of the previous two years. USDT's 60-day supply growth peaked at $20.6 billion in December 2024 and generally ranged between $10 billion and $16 billion during much of 2025.
Bitcoin demand deteriorates
The contraction has coincided with a sharp deterioration in Bitcoin's apparent demand. CryptoQuant's apparent demand indicator fell to negative 284,000 BTC over 30 days, its weakest reading since March 28, 2025. The measure estimates the difference between newly issued and newly active supply and the amount the market absorbs.
CryptoQuant found that the Coinbase Premium Index remained negative for 30 consecutive days, averaging approximately minus 0.14%. Glassnode's adjusted measure separately recorded its deepest 30-day discount since February. US spot Bitcoin exchange-traded funds have also recorded $1.6 billion in net outflows across 20 trading sessions.
Recent buyers face mounting losses
The liquidity contraction is occurring as investors who entered the market during the August and September rally increasingly find themselves holding Bitcoin at a loss. CryptoQuant data shows that the unrealized profit margin of coins held for one to three months has collapsed from 33% on Sept. 22 to negative 6%.
The 39% reversal has left these investors with an average acquisition price near $79,500, against Bitcoin's market price of approximately $74,600 when the research was compiled. Previous corrections during the current cycle have frequently pushed this profitability measure toward negative 12% before stabilizing.
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