Tether’s United States dollar-denominated stablecoin (USDT) has achieved a record-breaking market capitalization of over $120 billion for the first time. This milestone confirms the stablecoin’s growing dominance in the cryptocurrency market. Verified on October 20th via Tether’s official website, this breakthrough hints at a potential resurgence in cryptocurrency demand.
Historical data suggests a bull run may be around the corner.
In August, Tether minted $1.3 billion worth of USDT following a five-month low in bitcoin price. Shortly after, bitcoin jumped over 21% in just a few days, showing the potential impact of stablecoin growth.
October is historically a strong month for bitcoin, with the crypto community anticipating an “Uptober” rally. Tether’s supply surge may act as a catalyst. Data from Arkham Intelligence reveals significant stablecoin inflows to major centralized exchanges (CEXs) like Binance and Kraken. Over $66 million flowed to Binance, while Kraken received over $20 million. These inflows indicate potential buying pressure from investors. However, stablecoin movements can influence market trends in both directions.
A slowdown in stablecoin inflows often results in market corrections. In August, bitcoin price dipped below $60,000 following decreased stablecoin activity.
Stablecoins are a type of cryptocurrency designed to maintain a stable value by being pegged to traditional assets like the US dollar or gold. Unlike volatile cryptocurrencies such as Bitcoin, which can swing wildly in price, stablecoins allow investors to store and transfer value without worrying about drastic fluctuations. This stability makes them popular for everyday transactions, as a bridge between crypto and traditional finance, and a key tool for traders to quickly move in and out of different assets in the market.
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A Positive Bitcoin Indicator
As a key entry point for investors transitioning between fiat currencies and digital assets, USDt’s growth suggests increased market activity. A growing supply of stablecoins like USDT is often viewed as a bullish indicator, signaling investors are preparing to enter the cryptocurrency market. This increase in supply is particularly relevant to Bitcoin. The surge in USDT supply may drive the next rally for bitcoin, the world’s largest cryptocurrency.
Historically, stablecoin growth precedes bitcoin price increases. With USDT’s increasing supply and significant outflows from its treasury, market analysts are closely monitoring the potential impact on bitcoin and the broader crypto market as October progresses.
Read also: Stablecoins gain traction, threatening bitcoin’s dominance
Leading Nigerian crypto analyst and founder of CryptoPreacher Academy, Rume Ophi, has shared his insights on USDT reaching an all-time high, suggesting that this milestone could signal the start of a new bull market. In a chat with Crypto Asset Buyer, he emphasized the crucial role stablecoins play in the cryptocurrency ecosystem, noting that they account for around 50% of all blockchain on-chain transactions.
“It suggests that the bull market is about to begin. This is my opinion. Stablecoins amount to about 50% of all blockchain onchain transactions. The payment narrative of the industry has just started. Stablecoins are a big deal in this industry. Easy movement of money across continents TradFi can’t beat that”, Ophi maintained.
According to Ophi, stablecoins offer unmatched convenience for cross-border money transfers, something traditional finance (TradFi) can’t compete with. While there’s talk of de-dollarization, the analyst believes the U.S. dollar will remain dominant, even in discussions surrounding BRICS nations.
Notably, as if a big endorsement on the huge potential of the global stablecoin industry, Stripe, a US-based payment processing company, acquired Bridge, a fintech startup specializing in facilitating stablecoin payments, for $1.1 billion.
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Bitcoin dominance at bullish level
Interestingly, bitcoin’s market dominance has reached a bullish level, exhibiting parabolic growth, which historically precedes sharp corrections and bearish divergence. As bitcoin attracts more capital, altcoins face downward pressure and potential market share loss. A drop below the 52% support level could confirm a downward shift, potentially triggering the long-awaited altcoin season.
Rad Also: Bitcoin Search Hits Lowest Point: What does this mean to the investor?
Solomon Victor is a Technical Analyst who is also knowledgeable about various aspects of blockchain and cryptocurrency.
