Crypto’s Growth Engine Stalls As Wintermute Warns Of ‘recycled...
Wintermute said inflows across stablecoins, ETFs and digital asset treasuries have plateaued, leaving crypto liquidity recycling internally.
Crypto market-maker Wintermute said the digital asset market’s current cycle is being driven by “recycled liquidity,” as inflows from its three primary funding sources have slowed.
In a Wednesday blog post, Wintermute argued that liquidity remains the defining force behind every crypto cycle. The market maker said that while blockchain continues to be adopted, the flow of fresh capital has decelerated in recent months.
The company pointed to stablecoins, exchange-traded funds (ETFs) and digital asset treasuries (DATs) as the three major conduits for crypto liquidity, warning that liquidity inflow in all three has reached a plateau.
Data shared by Wintermute showed that since 2024, the industry has seen expansion across these three sectors. ETF and DAT assets rose from $40 billion to $270 billion, while stablecoin issuance doubled to about $290 billion. However, the momentum has since faded, leaving the market in a “self-funded phase,” according to Wintermute.
Wintermute said the slowdown isn’t due to tighter monetary conditions.
The market maker said aggregate money supply (M2) remained supportive and central banks have started easing after two years of tightening. Wintermute suggested that the problem lies in where liquidity chooses to flow.
Wintermute said high short-term rates and elevated Secured Overnight Financing Rate (SOFR) led investors to park their cash in US Treasury bills, a safer bet than crypto assets.
The company said this dynamic left crypto trading volumes healthy, but growth remained stagnant as money moved between cryptocurrencies without any fresh inflows entering the ecosystem.
The result is what Wintermute called a “player-versus-player” market, where rallies are short-lived and volatility is driven by liquidation cascades instead of sustained buying pressure.
Source: CoinTelegraph
