Bitcoin faces $70,000 test as $14.2 billion stablecoin contraction exposes demand weakness

Bitcoin is facing a fresh liquidity squeeze as mounting losses among recent buyers threaten to derail its recovery.

Stablecoin supply has contracted by $14.2 billion over the past month, its sharpest decline since June 2022, while Bitcoin's apparent demand has fallen by 284,000 BTC, approaching levels last seen during the March 2025 market turmoil.

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.

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.