Is it possible that USDTs 120 billion market capitalization could spark the upcoming bull rally
Tether’s USD (USDT), the largest stablecoin in terms of market capitalization, has achieved a significant milestone by surpassing the $120 billion mark. This increase in circulating supply is often seen as a precursor to a potential bull rally in the cryptocurrency market, leading to speculation that it could indicate the next major upward trend for Bitcoin (BTC) and the wider crypto space.
As of October 20, Tether’s market capitalization reached $120.16 billion, with over 61% of USDT circulating on the Tron (TRX) network and another 45% on Ethereum (ETH). This surge in Tether’s supply comes at a time when the cryptocurrency market is showing early signs of a potential rebound.
“Hitting $120B is a strong sign of how stablecoins are shaping the crypto space. The balance between Tron and Ethereum circulation says a lot about network preferences,” said Earnscape.
Historically, a growing supply of stablecoins is seen as an indication of increased buying power among investors. Rising stablecoin circulation often suggests that investors are preparing to inject liquidity into the market, driving demand for volatile assets like Bitcoin (BTC).
Data from Arkham Intelligence reveals that in the past 48 hours, Tether’s treasury has sent over $66 million worth of USDT to Binance and another $20 million to Kraken. These transfers to major centralized exchanges (CEXs) suggest that large-scale investors are getting ready to deploy their stablecoin reserves, potentially pushing the market higher. This flow of funds into exchanges usually precedes significant buying pressure, creating a favorable environment for a rally.
The relationship between Tether and Bitcoin is well-documented, with USDT often acting as a liquidity bridge during periods of market turbulence. In August, Tether minted $1.3 billion worth of USDT over five days, coinciding with Bitcoin’s recovery from a five-month low. This boost in liquidity helped Bitcoin climb, showcasing the influence that Tether’s supply can have on driving market momentum.
With Bitcoin hovering around $68,000, some analysts are optimistic about its next move to $70,000. With $1.67 billion in short positions potentially facing liquidation, experts believe Bitcoin could break through to the $80,000 range. The increased supply of USDT, combined with recent exchange inflows, further supports this bullish outlook.
Looking ahead, as Bitcoin approaches the key resistance level of $70,000, some crypto analysts predict even more explosive growth. Chart patterns suggest that a breakout is imminent, with Bitcoin potentially reaching a peak between $140,000 and $160,000 during this cycle.
Cryptocon, a well-known market analyst, echoes this bullish sentiment and has identified a potential high of $240,000 based on the Consecutive Candles 9 (CC9) indicator, indicating a strong long-term outlook for Bitcoin.
However, despite the optimistic outlook, concerns about Tether’s dominance persist. The stablecoin now accounts for nearly 69% of the total stablecoin market, and questions about its dollar reserves have lingered for years. Critics argue that if Tether’s backing is ever proven insufficient, it could lead to a market crash, casting doubt on its role as a reliable liquidity source.
While Tether’s surge in market capitalization has raised hopes for a bull rally, the risks associated with its dominance cannot be ignored. Currently, the influx of USDT into major exchanges, coupled with strong buying interest from traders, suggests that a rally is more likely in the near term rather than a crash.
If historical patterns hold true, the influx of USDT could fuel the next rise in BTC. However, the long-term outlook will depend on market liquidity and broader confidence in Tether’s financial stability. For now, investors remain cautiously optimistic as the market sets its sights on new heights.