Shrinking liquidity in the cryptocurrency market is raising alarms about asset valuations, as investors increasingly turn to safe-haven assets like precious metals amid global trade uncertainties. Analysts point to the stagnation of stablecoin supply as a significant obstacle for Bitcoin (BTC) and the broader crypto market. Matrixport highlights that stablecoins are crucial for digital asset liquidity, and a stagnant supply usually indicates capital is exiting crypto markets in favor of fiat currencies.
According to CryptoQuant, the stablecoin supply has decreased by $5.6 billion from $159 billion at the start of the year to $153.4 billion. Binance, one of the largest crypto exchanges, has also seen a 19% decline in its stablecoin reserves since November 2025.
Further complicating the situation, Bitcoin's correlation with gold has shifted. CryptoQuant's CEO, Ki Young Ju, notes that Bitcoin's 90-day Pearson correlation with gold has turned negative, suggesting a decoupling from its usual "digital gold" status.
This change in dynamics is exacerbated by renewed tariff uncertainties. A global tariff plan introduced by US President Donald Trump has sparked geopolitical concerns, driving crypto capital towards precious metals, according to Ryan Lee, chief analyst at Bitget. Lee emphasizes that these factors are limiting the potential for digital assets, as they now compete with other defensive and growth assets.
The broader macroeconomic backdrop, featuring tariff uncertainties and geopolitical tensions, has led to a shift in capital towards precious metals and AI-linked equities, thinning crypto liquidity. Until recovery catalysts—such as clearer US policies or more favorable signals from the Federal Reserve on interest rate cuts—emerge, the crypto market's upside will remain constrained.
This trend is reflected in the performance of gold and silver, which have increased by 19% and 21% respectively, while Bitcoin's price has dropped by 27% according to TradingView. In the tokenized assets sphere, Tether Gold (XAUT) has seen a 20% jump in value to $2.7 billion, with a 33% rise in holders, as indicated by data from RWA.xyz.
The tokenized commodities market has also surpassed $6 billion as of February 11, marking a 53% increase in less than six weeks, driven by increased gold investments on the blockchain.