The market capitalization of Tether’s US dollar-backed stablecoin USDT has exceeded $120 billion for the first time.
Stablecoins like USDT act as a bridge between fiat currencies and digital assets. Supply often increases before crypto market activity picks up as investors prepare to migrate to other digital assets.
A similar situation occurred in August when Tether minted $1.3 billion USDT in five days. After falling to just over $49,500, Bitcoin’s price quickly rebounded by more than 21%, rising to $60,271.
October is a historically strong month for Bitcoin, so this increase in USDT supply could help push the market higher. Data from Arkham Intelligence shows that USDT is being sent in large quantities from Tether’s treasury to major exchanges such as Binance and Kraken as investors look for future profits.
However, in the past, after stablecoin inflows slowed, the market declined. For example, in August, when institutional purchases of USDT were temporarily halted, the price of Bitcoin briefly fell below $60,000.
Historically, October has been one of the best months for Bitcoin, with an average return of 21%, according to CoinGlass. In 2020, Bitcoin prices rose over 27% in October and continued to rise until November.
Bitcoin needs to close the week above $68,700 to confirm a breakout this month. Additionally, Bitcoin exchange traded fund (ETF) net flows exceeded $20 billion, reaching a milestone that took nearly five years for gold ETFs to achieve. Bitcoin ETFs managed to reach this number in just 10 months, and there is growing optimism that it will rise further by the end of the month.
Tether is widely known for its role in developing USDT, a stablecoin pegged to the US dollar, but the company has expanded its operations and created distinct divisions, including an investment arm. Ardoino revealed in June that Tether plans to invest more than $1 billion within 12 months.
