USDT supply rapidly shrinks again, signaling a bottom in 2022! CryptoQuant analyst: Bitcoin selling pressure exhausted, may be poised for a reversal

CryptoQuant analyst @MorenoDV_ recently released an analysis showing that USDT supply is experiencing a rare and sharp contraction signal. This phenomenon has only occurred once before, at the market bottom in 2022, sparking market discussion: Is cryptocurrency repeating the extreme stress turning point seen back then?
(Background recap: Strategy is buying again! Adding $39.8 million to acquire 592 BTC, bringing total holdings close to 720,000 BTC)
(Additional context: Binance Bitcoin balance surges past 676,000 BTC — “a new high since November 2024”! Insider whale Garrett Jin continues depositing, are sell pressure alarms ringing?)

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• USDT triggers rare historical signal
• Large daily outflows and institutional exits
• Stablecoins as “dry powder” role

CryptoQuant analyst @MorenoDV_ latest points out that the stablecoin USDT supply shows a rare and sharp contraction signal, which has only appeared once before at the 2022 market bottom, raising questions about whether current crypto markets are under similar extreme pressure, possibly indicating a reversal opportunity after selling exhaustion.

USDT Just Triggered a Signal Seen Only at the 2022 Bottom

“Extreme liquidity stress has historically marked opportunity, but only once selling exhaustion is confirmed.” – By @MorenoDV_ pic.twitter.com/xxGJgQziEF

— CryptoQuant.com (@cryptoquant_com) February 23, 2026

USDT triggers rare historical signal

In his latest article, CryptoQuant analyst @MorenoDV_ states that the 60-day market cap change of USDT has fallen below negative $3 billion, a phenomenon only the second time in history. The first occurred in late 2022, when Bitcoin was forming a cycle bottom around $16,000, amid extreme fear and forced liquidation selling pressure. Now, this signal reappears as Bitcoin, after reaching a record high last year, continues to retrace within the current $65,000–$70,000 range.

Large daily outflows and institutional exits

The article further notes that USDT daily outflows exceeding $1 billion have occurred three times recently. These large redemption events often coincide with local bottoms in Bitcoin, macro bottoms, or periods of intense volatility. Such USDT outflows typically reflect institutional investors or large holders completely exiting the crypto ecosystem, rather than signaling the start of a sustained downtrend. This behavior often occurs when market selling pressure is nearing exhaustion.

Stablecoins as “dry powder” role

Stablecoins are viewed as the “dry powder” of the crypto market. When USDT supply expands, it indicates new capital flowing into the market; conversely, sharp contractions suggest liquidity withdrawal, rising risk aversion, or forced redemptions. For highly liquid and reflexive assets like Bitcoin, USDT’s dynamic changes have a significant impact. Currently, the 60-day market cap continues to shrink, indicating structural tightening of native crypto liquidity and ongoing capital outflows.

@MorenoDV_ emphasizes that historically, once forced deleveraging phases end and USDT liquidity stabilizes, Bitcoin tends to enter a strong mid-term rally as liquidity conditions normalize. The risk-reward ratio now depends on whether USDT contraction stabilizes: continued contraction could further pressure prices downward; if liquidity stabilizes or begins to reverse, market asymmetry could quickly turn bullish.

However, although historical experience shows that extreme liquidity stress often signals buying opportunities, this is only valid if selling exhaustion is confirmed. The market must closely monitor whether USDT supply stabilizes or rebounds to determine if a recovery phase has begun.