The cryptocurrency market is showing intensifying bearish signals as key liquidity measures weaken and traditional safe-haven assets like gold, silver, and copper have sustained strong price gains in recent weeks.
What Happened
According to CryptoQuant, data from on-chain analysis shows the total market capitalization of ERC-20 (ETH) stablecoins fell by approximately $7 billion over a single week, from about $162 billion to $155 billion, marking one of the sharpest declines in this cycle.
The drop in stablecoin capitalization is interpreted by market observers as a sign of reduced demand and investor rotation out of crypto, coinciding with receding liquidity in the sector.
Stablecoin contraction mirrors reduced demand for crypto liquidity
Analysts note that when stablecoin supply contracts, it typically reflects investors redeeming tokens back into fiat rather than deploying them into risk assets.
This dynamic is significant because stablecoins often act as a gateway to broader crypto trading activity. A sustained contraction, particularly across multiple chains, suggests that liquidity may be migrating away from digital assets.
Bitcoin’s (BTC) price has struggled in recent weeks, hovering near $88,000 and marking a notable slide from prior highs near $96,000 earlier in January, reflecting an extended period of sideways or downward pressure in the world’s largest cryptocurrency.
Precious Metals Outperform Crypto Amid Risk Aversion
At the same time, major non-crypto markets have shown pronounced strength.
Gold has recently climbed above $5,000 per ounce, marking a multi-session rally as geopolitical and macro uncertainty mounts, while silver prices have surged past $100 an ounce, levels not seen in decades, before plunging reversing around 14% gains, erasing about $900 billion of market cap on Monday evening.
Also Read: From Hype To Liquidity: Data Shows Bitcoin Now Responds Only To Real Capital, Not Sentiment Copper, a key industrial and liquidity indicator, has also posted gains over the past month alongside broader commodity strength ‒ up more than 7% over recent weeks.
Price action across these metals suggests increased investor allocation to traditional stores of value.
Silver’s rally and depleted inventories have been highlighted by analysts as part of a broader commodity uptrend, alongside gold’s extended ascent driven by weaker real yields and geopolitical tensions.
Bearish Signals Vs. Broader Market Context
The simultaneous contraction in stablecoin capitalization, Bitcoin’s price pressure, and strong performance in precious and base metals are snapshots of market behavior during risk-off phases.
While individual asset performance varies, the divergence between crypto and metals prices suggests capital is currently favoring assets perceived as safe or liquid.
Whether this pattern constitutes a structural bear market for crypto or a cyclical correction against a backdrop of macro rotation depends on capital flows and liquidity conditions in the coming sessions.
However, current data shows that traditional safe-haven assets are drawing notable interest while key liquidity indicators within crypto weaken.
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