Bitcoin price today: $61,000
Bitcoin price on Wednesday ended below the $62,000 support, showing signs of weakness. CryptoQuant’s report shows how the rise in stablecoin market capitalization is a positive sign for Bitcoin and other cryptocurrencies. The US Spot Bitcoin ETF recorded its second consecutive day of outflows on Wednesday.
Bitcoin (BTC) price stabilized around $61,000 on Thursday after closing below the key support level of $62,000 on Wednesday. This indicates that market sentiment may shift in the short term as institutional demand wanes, as evidenced by the second consecutive day of outflows of spot Bitcoin exchange traded funds (ETFs) in the US. are. However, an increase in stablecoin market capitalization may signal underlying bullish sentiment and an opportunity for future recovery.
Bitcoin price could skyrocket as stablecoin market cap reaches new high
Tuesday’s CryptoQuant report highlights how rising stablecoin market capitalization could be a positive sign for Bitcoin and other cryptocurrencies.
The report explains that liquidity in the cryptocurrency market, measured by the value of stablecoins, reached an all-time high in late September. The chart below shows that the market capitalization of the leading USD-denominated stablecoins is now $169 billion, an increase of $40 billion (31%) year-to-date (year-to-date). An increase in the market capitalization of stablecoins is generally associated with an increase in the price of Bitcoin and cryptocurrencies, as it provides more liquidity to the market.
Stablecoins: Total market capitalization. Source: CryptoQuant
Additionally, the report states that increases in stablecoin balances on exchanges are positively correlated with increases in the price of Bitcoin and cryptocurrencies. Since January 2023, when the current bull cycle began, the total value of USDT (ERC20) on the exchange has increased from $9.2 billion to $22.7 billion (+146%). What is notable is that these balances have increased by 20% even though the price of Bitcoin has remained flat.
USDT: Book on exchange charts. Source: CryptoQuant
Furthermore, the market capitalization of USDT and USDC continues to increase each month, albeit at a slower pace than at the beginning of the year. USDC market capitalization is growing at a monthly pace of 2.1% compared to a peak of 14.4% in March 2024. Meanwhile, USDT’s market capitalization has increased by 1.3% month-on-month, compared to the all-time high of 6.6 times. % in March. Accelerating monthly growth in the market capitalization of these stablecoins could signal a new rise in the price of Bitcoin and cryptocurrencies.
Stablecoins: Market Capitalization Growth (30 days % change graph. Source: CryptoQuant
However, institutional demand remains showing signs of weakness in the short term. The US Bitcoin Spot ETF recorded a modest outflow of $30.6 million on Wednesday, according to data from Coniglass. Studying ETF flow data can help you observe institutional investor sentiment towards Bitcoin. If the size of the outflow continues to grow, this trend will indicate a decline in demand for Bitcoin, leading to a fall in price.
Total Bitcoin Spot ETF Net Inflows Chart. Source: Coin Glass
Bitcoin Price Prediction: BTC closes below $62,000 support level
Bitcoin price ended Wednesday below the $62,125 support level, erasing 2.45% of its value on the day. As of writing on Thursday, BTC is trading near $61,000, with support near the 200-day exponential moving average (EMA) of $60,024.
If it closes below $60,024, BTC could fall more than 4% and retest its September 16 low of $57,493.
The Relative Strength Index (RSI) on the daily chart is below the neutral level of 50, suggesting weak momentum and could lead to further declines in Bitcoin price.
BTC/USDT daily chart
However, if BTC closes above $62,125, the bearish theory will be invalidated. This scenario could lead to an increase in BTC price and retest the psychologically important $66,000 level.
Frequently asked questions about Bitcoin, altcoins, and stablecoins
Bitcoin is the largest cryptocurrency by market capitalization and is a virtual currency designed to function as money. This form of payment is not controlled by any particular person, group, or entity and eliminates the need for third parties to participate during financial transactions.
An altcoin is any cryptocurrency other than Bitcoin, but some consider Ethereum to be a non-altcoin because it is these two cryptocurrencies that forks occur. If this is true, Litecoin would be the first altcoin to fork from the Bitcoin protocol and thus be an “improved” version of it.
A stablecoin is a cryptocurrency that is designed to have a stable price, and its value is backed by the reserves of the asset it represents. To achieve this, the value of a stablecoin is pegged to a commodity or financial instrument, such as the US dollar (USD), and its supply is regulated by an algorithm or demand. The main purpose of stablecoins is to provide an on/off ramp for investors who wish to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value, as cryptocurrencies are generally volatile.
Bitcoin dominance is the ratio of Bitcoin’s market capitalization to the market capitalization of all cryptocurrencies combined. This clearly shows the interest in Bitcoin among investors. BTC’s dominance typically occurs around bull markets, where investors turn to relatively stable, high-market-cap cryptocurrencies like Bitcoin. Decreasing BTC dominance usually means investors are moving their capital and profits to altcoins in search of higher returns, which usually causes an explosive rally in altcoins.
