In a noteworthy observation, market‑maker and algorithmic trading firm Wintermute warns that the cryptocurrency markets are entering a phase of self‑funding, as three key liquidity channels—stablecoins, ETFs, and digital asset trusts (DATs)—are showing signs of stagnation despite a globally accommodative monetary environment.
The Core Message
Wintermute’s latest analysis, as shared by its representative Jasper De Maere, highlights that while macro conditions appear supportive—global liquidity is abundant and central banks continue to maintain easing postures—the crypto sector isn’t attracting new capital inflows as before. Instead, capital is largely being recycled within the ecosystem rather than expanding outward.
Specifically:
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The stablecoin supply growth has slowed and even fallen this week—marking the first decline after several months of uninterrupted increase.
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The three core channels Wintermute tracks—stablecoins, ETFs, and DATs—have all plateaued after strong growth through late 2024 and early 2025.
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According to Wintermute, this doesn’t just reflect capital rotation, but also a shortfall of fresh external funds entering the market.
Why It Matters
Liquidity is the lifeblood of efficient markets. In the crypto sphere especially, fresh capital inflows often drive large upward movements, while contraction or stagnation in liquidity can lead to weaker performance, higher volatility, and diminished breadth of market participation.
Wintermute argues that since the three major channels are flatlining:
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The market is effectively in an internal recycling mode — funds moving between crypto segments instead of new money arriving from outside.
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Broader macro‑liquidity metrics remain elevated (e.g., global M2 money supply), yet elevated interest rates (such as the U.S. SOFR rate) mean cash is still “stuck” in traditional asset classes rather than moving into crypto.
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Market behavior reflects this shift: rapid rallies are less sustainable, volatility is elevated, and market breadth (i.e., number of advancing assets) is narrower despite fairly static total assets under management.
The Three Channels in Detail
1. Stablecoins
Typically a proxy for investor willingness to hold or deploy into crypto, stablecoins had been expanding quickly. But the recent decline—or at least plateau—signals a potential loss of momentum in new capital entering the system via this channel.
2. Crypto ETFs & DATs
These represent institutional interest and capital flows from the traditional finance world into digital assets. Wintermute notes that these too have seen strong growth (e.g., ETF + DAT holdings rising from about US$40 billion to US$270 billion) but now appear to be stalling.
3. Broader Macro Liquidity versus Crypto Liquidity
Despite the macro environment being ample in global liquidity, crypto is not capturing the overflow; instead, capital remains in traditional assets (such as equities and U.S. Treasuries). The divergence suggests crypto is not benefiting from the same wave of liquidity that supports other asset classes.
Implications for Investors
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The fact that crypto’s liquidity channels are flat may indicate the market is less likely to experience a breakout driven purely by liquidity.
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Increased volatility and weaker price breadth may become more common until new external capital re‑enters the market (e.g., newly issued stablecoins, new ETFs, expansion of DAT issuance).
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Investors may want to pay close attention to leading signals of renewed inflows: fresh issuance of stablecoins, significant ETF launches, growth in institutional trust products—these could act as triggers for the next leg of expansion.
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Risk may be elevated in the absence of such triggers: momentum may fade, price swings could intensify, and market rallies may be shorter unless supported by fundamental use‑case growth or regulatory developments.
Outlook & Conclusion
In sum, Wintermute’s warning serves as a cautionary flag: although the macro‑environment remains benign, the crypto market appears to be lacking fresh liquidity injection, which has historically fueled many of its large upward moves. Until a new wave of external capital arrives, the market may be operating in a steady‑state mode—recycling existing funds rather than expanding the base.
For market participants, the key question is: when and where will the next major liquidity influx originate? The answers could shape the next phase of crypto’s evolution—whether that be a consolidation period, a volatile sideways ride, or a launch pad for renewed growth.
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