🚨 Crypto liquidity has returned to levels last seen during the collapse of FTX.

Over the past 60 days, USDT supply has declined by more than $3 billion a contraction similar to the conditions that formed near Bitcoin’s 2022 bottom.

When stablecoin supply shrinks, it signals capital leaving the system. Investors redeem. Risk appetite fades. Leverage unwinds. Liquidity dries up and in crypto, liquidity is the oxygen.

But here’s the nuance most people miss:

Historically, aggressive liquidity contractions tend to occur late in selloffs, not at the beginning. By the time stablecoin supply has materially declined, a significant portion of panic selling has already played out. The market becomes thin, positioning resets, and volatility compresses.

Major reversals don’t begin when sentiment turns optimistic.
They begin when outflows slow.
When redemptions stabilize.
When liquidity stops exiting.

That inflection point is subtle and often ignored.

This doesn’t guarantee a bottom. It highlights a transition phase. A shift from forced selling toward balance. And in past cycles, those shifts have preceded structural recoveries.

In crypto, price follows liquidity.

Watch the flows.
The next expansion phase starts there.