LIQUIDITY, THE LIFEBLOOD OF CRYPTO

Summary from the TLDR Crypto newsletter

Crypto's three primary liquidity channels – DATs, stablecoins, and ETFs – have plateaued after strong momentum through Q1 2025. Combined DATs and ETFs have grown from $40 billion to $270 billion since early 2024, while stablecoins doubled from $140 billion to $290 billion before flattening. Despite global M2 expansion and US quantitative tightening officially ending, high SOFR rates keep cash parked in T-bills yielding attractive returns, redirecting liquidity away from crypto into equity markets instead of compounding digital asset inflows. The slowdown across all three channels signals broad deceleration in fresh capital deployment rather than simple product rotation. Crypto entered a "self-funded phase" where capital rotates internally between majors and alt sectors rather than entering net new, creating PVP dynamics with short-lived rallies, narrowing breadth, and volatility spikes driven by liquidation cascades instead of sustained trends.