Originally published on: October 20, 2024
Tether’s US dollar-denominated stablecoin has smashed through the $120 billion market capitalization barrier, hinting at a potential uptick in the crypto market.
On October 20, Tether’s USDt, the largest stablecoin globally, crossed the $120 billion threshold, as per the company’s website, which provides real-time updates on the stablecoin’s circulation.
Stablecoins act as the bridge connecting traditional fiat currencies to digital assets, making them a crucial indicator for predicting crypto market movements. An increasing supply of stablecoins often precedes a surge in crypto prices, signaling heightened investor interest in cryptocurrencies.
The upward trajectory of USDT supply could fuel the next Bitcoin rally. Back in August, Tether generated $1.3 billion in USDT in just five days following Bitcoin’s dip to above $49,500 on August 5.
By August 9, the infusion of $1.3 billion in USDT helped Bitcoin recover by over 21%, reaching $60,271 from the market low on August 5.
The ballooning USDT supply sets the stage for a potential “Uptober” rally, a term commonly used within the crypto community to reference the bullish trends in October, historically favorable for Bitcoin.
Monitoring the flows of Tether’s treasury reveals substantial transfers to major centralized exchanges, indicating an influx of buying activity from investors. Recent data from Arkham Intelligence details sizable USDT transfers to exchanges like Binance and Kraken, further underlining the mounting interest in cryptocurrencies.
However, a lack of stablecoin inflows can trigger a market correction, as observed when Bitcoin briefly dipped below $60,000 on August 12 when institutional USDT purchases paused temporarily.
Historical data analysis paints a positive picture for Bitcoin’s performance, with October typically delivering the second-best returns for the cryptocurrency, trailing only behind November. In the previous Bitcoin halving year of 2020, October and November saw significant price surges, contributing to a six-month rally until March 2021.
For Bitcoin to break out of its current price range, it needs to secure a weekly close above $68,700, according to analyst Rekt Capital. The growing interest in Bitcoin ETFs could potentially propel Bitcoin’s upward trajectory, with ETF net flows surpassing $20 billion in just 10 months since their launch, outpacing gold-based ETFs.
As the crypto market gears up for potential gains, keep an eye on Tether’s market moves and Bitcoin’s price action to navigate through the evolving landscape of digital assets. Stay informed with our weekly Finance Redefined newsletter for expert insights and analysis on the latest DeFi developments and financial opportunities. Subscribe today to make well-informed decisions with confidence.
