Global Stock Markets Hit Records While Bitcoin Stagnates: Is the Historic $4 Billion Contraction in USDT Supply the End of the Sell-off?

While global stock markets reach record levels, Bitcoin (BTC) continues to decouple negatively from traditional exchanges, trading sideways at the $64,000 level.

The cryptocurrency market is struggling to keep pace with global economic optimism due to capital shifting toward artificial intelligence (AI) focused assets and outflows from spot Bitcoin ETFs. While indices like the S&P 500 and Dow Jones test all-time highs, the leading cryptocurrency is moving within a narrow band around $64,000. According to chart data, the Bitcoin price, which fluctuated between $63,606.21 and $64,443.05 in the last 24 hours, reflects the overall stagnation in the market.

ETF Outflows and the AI Rotation

At the root of this divergence lies the $5.4 billion in net capital outflows from spot Bitcoin ETFs during the first half of the year. A report prepared by DWF Labs reveals that interest from both institutional and retail investors has shifted toward the artificial intelligence sector, increasing the pressure on crypto assets. Additionally, the fact that second-quarter revenues for Circle, the issuer of the second-largest stablecoin USDC, came in below expectations at $701 million is seen as another indicator of the overall slowdown in the sector.

USDT Supply Contraction and Sell-side Exhaustion

The Tether (USDT) supply, which indicates market liquidity, has experienced a historic $4 billion contraction in the last 60 days. CryptoQuant analysts state that this sharp decline typically points to “sell-side exhaustion” periods, where selling pressure in the market is nearing its end. Although historical data suggests that Bitcoin recovery processes begin after such large contractions in USDT supply, a cautious stance remains until new capital inflows occur.

Investors are now focused on U.S. employment data and ISM services PMI data, which could determine the market’s direction. While open interest data in the derivatives market shows activity in some altcoins, general sentiment still appears to favor sellers. In particular, negative funding rates on the XLM side prove that expectations for a market decline persist.