As a seasoned crypto investor with a decade of experience under my belt, I can confidently say that the surge in Tether’s USDt market capitalization to $120 billion is a bullish signal for the crypto market. Historically, increasing stablecoin supply has been a precursor to a bull rally, and this trend doesn’t seem to be an exception.
For the very first time, the U.S. dollar-backed cryptocurrency issued by Tether has exceeded a market value of $120 billion, suggesting a possible surge in the cryptocurrency market.
On October 20th, as indicated by their own site that provides real-time information, Tether’s USDt (USDT), the world’s leading stablecoin, exceeded a total value of $120 billion.
Stablecoins are the main on-ramp between the world of fiat currencies and digital assets. A growing stablecoin supply is often used as a signal to predict an upcoming bull rally, as it suggests that investors are loading up on stablecoins before investing in cryptocurrencies.
The growing USDT supply could help catalyze the next Bitcoin (BTC) rally. In August, Tether minted $1.3 billion of USDT in five days after the Bitcoin price bottomed at a five-month low of above $49,500 on Aug. 5.
By August 9th, the USDT investment of $1.3 billion played a significant role in boosting Bitcoin’s price by more than 21%, allowing it to trade at approximately $60,271, recovering from its low on August 5th.
Can $120 billion USDT catalyze the “Uptober” Bitcoin rally?
Increasing the amount of stablecoins issued by Tether might spark a surge similar to “Uptober” (a term used in crypto circles to refer to an upward trend in October), as this month has traditionally been favorable for Bitcoin’s price increase.
By examining the outgoing transactions from Tether’s reserves, it appears that a substantial amount is being directed towards major centralized cryptocurrency exchanges (exchanges for short). This trend suggests that investors are likely preparing to buy, hinting at potential increased demand in the market.
Based on data from Arkham Intelligence, in the last 48 hours, approximately $66 million in stablecoins from Tether’s reserves were transferred to Binance, while around $20 million in USDT went to the Kraken trading platform.
Instead of having a continuous flow of stablecoins, a shortage often triggers a corrective action in the crypto market. For instance, on August 12, the price of Bitcoin dropped below $60,000, causing a nearly 4% correction because institutions temporarily halted their USDT purchases.
Can Bitcoin stage a breakout before the end of October?
According to historical trends in Bitcoin’s price movements, certain analysts predicted that the cryptocurrency could experience a three-month surge towards $92,000 following the downturn observed in September.
Historically speaking, October typically ranks as Bitcoin’s second most profitable month, boasting an average increase of around 21%. This is surpassed only by November, where the average return for Bitcoin has been found to be over 46% according to data from CoinGlass.
In the year of Bitcoin’s last halving event (which occurred in 2020), there was a significant increase in its price. Specifically, it went up by more than 27% in October and over 42% in November. This upward trend persisted for around six months, concluding in March 2021.
As per the analysis by well-known cryptocurrency expert Rekt Capital, for Bitcoin to potentially break free from its current sideways movement, it must end the week at a price higher than $68,700.
An increase in investments flowing into Bitcoin exchange-traded funds (ETFs) might help trigger a significant rise in Bitcoin’s value. In fact, these Bitcoin ETFs exceeded their previous record of $20 billion in total net inflows on October 17, merely ten months after they were introduced to the market.
In contrast, it took gold-based ETFs nearly five years to cross this same $20 billion milestone.
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2024-10-20 16:31