Stablecoin inflows double, but can liquidity absorb Bitcoin sell-off?

Key Insights

• Tether and Circle minted $4.75B on Tron and Solana in the past week. Stablecoin dominance surged to its highest level in three years.
• Over 47% of the circulating BTC supply was lost, the highest level since 2023.
• Stablecoin capital inflow doubles, but is this enough liquidity to neutralize the current selling pressure?

The crypto market extended the weakness for the second week with another crazy drop in the past 24 hours. Bitcoin (BTC) alone lost a huge portion of its valuation, more than $10K from a single token.

Massive liquidations overnight clearly influenced the downside movement, as evidenced by the stablecoin charts. The reserves were increasing while minting escalated. This highlighted more inclination towards the more stable assets.

The data indicated a bearish market outlook. However, the doubling of stablecoin capital inflow since late December could mean some optimism. But is that enough to reverse the current trend or just a signal to stay alert?

Tether and Circle Minting Stablecoins

To begin with, Tether issued $1 billion USDT on Tron, increasing the overall supply. Tether and Circle together have minted about $4.75 billion on Tron and Solana in the past week.

Hence, USDT by Tether and USDC by Circle were the main sources of this stablecoin supply increase. They are gateways for institutional and retail money to enter the crypto markets.

Owing to that, stablecoin dominance reached its highest level in three years at 12.5%. The result indicated that participants were scared and cash was sitting on the sidelines. This trend has made it easier to sell the larger crypto market, keeping prices down.

Stablecoin monthly dominance chart | Source: Ted Pillows/X

Historical data show that liquidity buildup often precedes large price rises. This usually sets the market up for a strong rebound when the funds are deployed back into the risk-on assets.

How Stablecoin Dominance Is Trapping Bitcoin In Loss

Stablecoin dominance reached a 3-year peak, trapping Bitcoin in a loss. Data from Glassnode indicated that 9.3 million BTC, or 47% of the total circulating supply, was in a bear market. This volume was the highest since January 2023, over two years ago.

Investors were choosing USDT and USDC over BTC dips because their price movements were stable. This meant they held back on buying BTC, thus maintaining sell pressure.

Such behavior creates a cycle in which falling prices cause more losses. This leads to more money going to stables and keeps BTC down.

Bitcoin’s total supply in loss data | Source: Glassnode

This trapped liquidity will only be released when dominance falls. In such a case, it would let it flow into Bitcoin and end the loss trap with a rebound.

With that in mind, monitoring stablecoin metrics becomes an early indicator of Bitcoin’s price fluctuations. Therefore, will the shift in the direction of capital inflow catalyze the market?

Will Stablecoin Liquidity Neutralize Sell Pressure?

On the capital inflow, stablecoin deposits into exchanges have more than doubled. They went from $51 billion in late December 2025 to $98 billion when writing. This increase was more than the 90-day average of $89 billion.

This big difference shows that more and more money is going into crypto. But Bitcoin was getting closer to a 50% drop from its all-time high in October. This decrease was a sign that investors may be interested again. Even some may have already bought the dip.

Is this liquidity, though, enough to stop the current sell pressure? Selling was still active and remained unabsorbed, indicating it was insufficient.

All stablecoins exchange inflow data | Source: CryptoQuant

This inflow may be preparing for aggressive buying, indicating that smart money is positioning itself appropriately. If this continues, it could lead to a rebound and a rise in altcoins when the pressure eases. But if stablecoin liquidity in favor of buying doesn’t rise, deeper corrections could occur.

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