Liquidity is drying up across the market, and the stablecoin market cap makes it clear. Nearly $10 billion has been erased since the 2026 cycle began, underscoring growing investor caution.
Zooming in, Ethereum [ETH] tells a similar story. It’s the most liquid chain, holding over 50% of stablecoin dominance, yet it’s still down around 6% on the year, further proof that the crypto market is tightening up.
The impact is clear. DeFiLlama shows total value locked (TVL) is down $20 billion, back to pre-election levels, signaling a clear pullback in liquidity and indicating that capital just isn’t flowing into DeFi like it used to.
Source: DeFiLlama
Overall, low liquidity is a major factor behind the crypto market’s cautious mood. Against that backdrop, news of the Federal Reserve injecting $16 billion in liquidity this week was enough to spark a market frenzy.
What makes the timing even more interesting is that the injection comes right after recent macro data, like the U.S. Consumer Price Index (CPI), showed cooler inflation, pushing the Fed to step in and add fresh liquidity.
According to AMBCrypto, this is a much-needed lifeline for the crypto market. Liquidity has been pulling back sharply, and naturally, fresh capital could help boost markets while creating new opportunities for investors.
The bigger picture? This injection also ties into another key development.
Crypto market signals rare BTC accumulation opportunity
Zoom out, and Gold (XAU) is still up around 14% so far this year.
Even with the recent sell-offs, it’s only down 12% from its late January peak at $5.5k. Meanwhile, Bitcoin [BTC] has taken a larger hit, correcting 22% over the same period, which has pushed the BTC/Gold ratio even lower.
The result? The monthly BTC/Gold RSI has hit an 11-year generational bottom. In fact, for the first time, the ratio has printed 7 straight red monthly candles, showing an extreme level of relative underperformance.
Source: TradingView (BTC/Gold)
Naturally, crypto market analysts are calling this a rare Bitcoin opportunity.
What makes it even more interesting is that it aligns with the $16 billion liquidity injection, giving bulls a potential edge to spark a rally in risk assets as sentiment slowly recovers from the “extreme” fear zone.
Moreover, low liquidity in the crypto market means even modest inflows could turn bullish. Still, fundamentals remain crucial before price action reflects it. According to AMBCrypto, the BTC/Gold ratio may be the catalyst to spark movement.
Final Summary
- Stablecoins are down, and DeFi TVL has dropped $20 billion, showing capital is pulling back, and the crypto market remains cautious.
- The BTC/Gold ratio hit an 11-year generational low, aligning with the Fed’s $16 billion liquidity injection, setting up a potential Bitcoin accumulation zone.