[DigitalToday reporter Yunseo Lee] As liquidity in the U.S. banking sector increased, the circulating supply of dollar-pegged stablecoins in the cryptocurrency market fell, data showed. Analysts say liquidity expansion alone may not be enough to expect a bitcoin rebound.
On Nov. 7 (local time), blockchain media outlet CryptoSlate reported that the Federal Reserve's reserve balances in the U.S. banking sector rose by $67.568 billion between Oct. 28 and Nov. 4. Over the same period, the circulating supply of dollar-pegged stablecoins fell by about 5.769 billion tokens, down 1.91 percent.
According to data released by the Fed on Nov. 5, reserve balances stood at about $2.96 trillion as of Nov. 4. Over the same period, the Treasury General Account balance fell by $79.384 billion to $936.248 billion. When the government spends funds from that account, it can increase reserve balances in the banking system if other conditions remain the same.
But measures of dollar liquidity inside the crypto market moved in the opposite direction. In DefiLlama data, USDT supply fell by about 3.655 billion tokens, accounting for 63.37 percent of the total decline. USDC fell by about 383 million tokens, and the combined decline in other dollar-linked stablecoins was about 1.73 billion tokens.
Still, the drop in circulating supply cannot be fully interpreted as investor outflows. It was not confirmed how much was affected by issuers' redemption processing, bridge-related accounting adjustments, or changes in token classification or data coverage.
Bitcoin also failed to rebound. On Coinbase, the BTC/USD daily close on Nov. 5 was $75,969.06, down 5.54 percent from $80,428.31 the previous day. Still, the price fall occurred after Nov. 4, the reference date for comparing reserve balances, meaning the two indicators do not reflect moves over exactly the same period.
The key is whether the increase in funds in the banking sector leads to actual bitcoin buying. Reserve balances are settlement funds banks hold at the Fed, while stablecoin supply reflects the scale of dollar-linked tokens circulating in the crypto market. Because they are different indicators, it is difficult to judge a recovery in bitcoin demand based on an increase in only one of them.
Ultimately, evidence is needed that links liquidity expansion to financing and actual buying to support a rebound. These indicators alone cannot confirm the cause of a subsequent bitcoin decline, and the possibility remains that the effects of higher liquidity could appear with a lag.
