Bitcoin tracks T-bills as stablecoin supply stalls

Stablecoin supply is crypto’s M2; its decline tightens Bitcoin liquidity

As reported by The Coin Republic, analysts observed roughly $2.24 billion drained from stablecoin supply in just ten days alongside a concurrent BTC drawdown from about $95,000 to $88,500, underscoring how these tokens function as deployable dollars within crypto’s market structure. The episode highlights a native M2-style pool that waxes and wanes with issuance and redemptions, tightening or loosening the liquidity that supports Bitcoin’s order books.

Over multi‑year windows, macro issuance dynamics also matter. As reported by Blockonomi, U.S. Treasury bill issuance has shown a roughly +0.80 correlation with Bitcoin price over the past four years while traditional M2 has decoupled, implying that when more dollars are absorbed into bills, fewer tend to circulate as stablecoins available to support crypto liquidity.

Why it matters now: thinner books, wider spreads, sharper BTC moves

When stablecoin supply stalls or reverses, market makers have less dollar‑collateral inventory to warehouse risk, order books thin out, and bid–ask spreads widen; during stress, slippage increases and moves become sharper. According to CryptoNews.net, large stablecoins have recently seen net redemptions or materially slower new issuance, a profile consistent with tighter trading conditions.

Editors have framed this linkage in plain terms to prevent conflating fiat M2 with crypto’s internal liquidity rails before presenting recent supply shifts.

Andjela Radmilac, reporter at CryptoSlate, said: “Stablecoin supply… is crypto’s native version of M2 money supply… With supply now drifting lower, the question isn’t whether Bitcoin will go up or down, but how violent will the path be?”

Risk monitoring can be simplified with a three‑metric dashboard: total stablecoin market capitalization across USDT, USDC, DAI, FDUSD, and USDP; net U.S. T‑bill issuance, based on data from the U.S. Department of the Treasury; and spot Bitcoin ETF net flows. According to LiveBitcoinNews, Bitcoin has closely tracked shifts in T‑bill issuance more than M2 or changes in the Federal Reserve’s balance sheet in recent years, suggesting this macro input belongs alongside on‑chain stablecoin measures rather than beneath them.

At the time of this writing, market data place Bitcoin around $68,220 per BTC, a neutral snapshot for context that can vary by venue and feed latency.

Define crypto’s native M2 and stablecoin mechanics

In traditional finance, M2 encompasses cash, checking deposits, savings accounts, and other near‑money instruments. The crypto analogue is the circulating supply of dollar‑pegged stablecoins used to settle trades, post collateral, and route liquidity across exchanges and chains; issuers include entities such as Circle (USDC) alongside other large tokens like USDT.

Supply expands when issuance outpaces redemptions and contracts when redemptions dominate; recent observations of net redemptions mean fewer units are available to support leverage, inventories, and settlement. Transmission to Bitcoin operates through multiple channels: reduced market‑maker balance sheets, wider spreads, and faster liquidation cascades when buffers are thin, while higher short‑term yields and heavier bill issuance can, in some regimes, divert dollars away from stablecoin creation and into Treasuries instead; evidence on this linkage is correlational rather than causal, and on‑chain supply should be read alongside exchange balances, velocity, regulatory developments, and macro shocks.