The latest snapshot of the Bitcoin market suggests that recent upward moves are more likely to be short-lived reactions than the start of a lasting recovery. As market liquidity weakens, a significant slowdown in stablecoin inflows stands out. This situation points to a lack of new capital strong enough to fuel a sustained rally in crypto assets.
Liquidity crunch draws attention
The pace of growth in USDT and USDC supply has slowed notably compared to previous periods, now acting as a key factor restricting buying power in the market. Tether’s USDT and Circle’s USDC remain the two most widely used stablecoins in the crypto ecosystem. Historically, an increase in their supply is seen as a major indicator of new money entering the space.
Strong Bitcoin rallies in the past were often powered by rising stablecoin supplies that brought new buying power. The current picture, however, clearly shows this support has weakened.
A look at previous cycles reveals that sharp slowdowns in stablecoin growth typically coincided with periods of Bitcoin price pullbacks. While occasional short-term recoveries occurred, these were unable to drive sustained momentum and were usually followed by renewed selling pressure.
Technical outlook remains pressured
After a steep decline from the $80,000 zone, Bitcoin is currently trading around $59,000. The price is stuck below its 50-day, 100-day, and 200-day moving averages, maintaining a bearish technical structure. With these averages now trending downward, the market still shows signs of persistent selling pressure.
Efforts to rebound as Bitcoin approached its 200-day moving average in May initially brought cautious optimism. However, the rebound proved brief, with sellers quickly regaining control. As a result, the price slipped back toward local lows.
Momentum indicators also fail to point to a strong recovery. The Relative Strength Index (RSI) continues to show weakness, highlighting buyers’ inability to mount a solid response to the current downtrend.
Upward moves may struggle for permanence
When new money entering the market is limited, upward price movements are increasingly driven by speculative positioning and short-covering. While these can trigger sharp jumps, they rarely bring about a lasting change in market direction.
Unless liquidity conditions improve and stablecoin growth gains momentum again, strong upward reactions risk being followed by fresh waves of selling.
As a result, any possible price rebounds in the current environment may be temporary technical responses rather than signs of a meaningful trend reversal. Without the scale of new capital needed to support a long-term recovery, Bitcoin is expected to remain volatile and directionless in the near future.
