Bitcoin BTCUSD could form a bottom in the coming weeks as the market capitalization of Tether (USDT) fell to levels that preceded BTC’s 2022 bear market lows.
Key takeaways:
-
Tether’s USDt triggers a signal that last preceded a 100% rally in the price of Bitcoin.
-
BTC price is testing two major support zones that have historically caused major price bounces.
Tether shows a floor signal reminiscent of 2022
On Sunday, Tether USDt’s 60-day market capitalization change was -$3.1 billion (see chart below), returning to a historically significant zone that coincided with Bitcoin’s 2022 bear market lows.
The only other time USDT’s market capitalization dropped by $3 billion in 60 days was in late 2022, just as Bitcoin hit its cyclical low near $15,500, amid peak fear and forced selling.
When the market capitalization of USDT falls sharply, it implies a withdrawal of liquidity, a feeling of risk aversion, or forced redemptions.
“The current 60-day contraction suggests sustained capital outflows, reflecting a structural tightening of native cryptocurrency liquidity,” CryptoQuant contributor MorenoDV_ said in a Quicktake analysis on Monday, adding:
“Extreme liquidity stress has historically marked opportunities, but only once sales exhaustion is confirmed.”
The chart above shows that after USDT’s 60-day market cap change fell below -$3 billion in late 2022, Bitcoin rose above $31,000 in March 2023, marking a 100% rally from the cycle low of $15,500.
Furthermore, Tether’s market cap lost $1 billion in the last day, which has only happened twice in the past. Each episode coincided with local/macroeconomic lows or strong volatility in the price of Bitcoin.
Significant drops in USDT market capitalization typically reflect the exit of institutions or large holders from the market, which “tends to occur at or near times of exhaustion, rather than at the beginning of sustained downtrends,” the analyst said.
As Cointelegraph reported, the dominance of Tether’s USDt stablecoin reached a key resistance level preceding BTC’s 2022 cycle low.
Therefore, the chances of Bitcoin hitting a bottom in the coming weeks may increase if USDt’s dominance tends to decline and sellers’ exhaustion is confirmed.
Bitcoin Fractal Chart Echoes Previous Lows
Bitcoin is also showing a familiar technical setup on the weekly chart that has coincided with macroeconomic lows in the past.
“Bitcoin is testing two major support zones at the same time,” analyst Mags said in a recent post on X.
The analyst referred to the support of the ascending trend line that marked 2022 and the horizontal support zone derived from the all-time high of 2021.
Historically, this combination has preceded multi-month price rallies. Specifically, the 376% rise in the price of BTC between November 2022 and March 2024, and the 380% gains in 2018-2019.
As Cointelegraph reported, other market experts continue to bet on a major BTC price recovery in 2026.
Among them is former Binance business development executive Chase Guo, who stated that Bitcoin will reach a new all-time high in 2026, due to liquidity positioning and evolving market mechanics.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investments and commercial movements involve risks and it is the responsibility of each person to do their due research before making an investment decision.
