Tether’s USD-denominated stablecoin has surpassed a record market capitalization of $120 billion for the first time, signaling a potential rally for the cryptocurrency.
Tether’s USDt (USDT), the world’s largest stablecoin, exceeded $120 billion on October 20, according to the company’s website, which updates stablecoin supply status in real time.
Tether tokens in circulation. Source: Tether.to
Stablecoins are the main gateway between the world of fiat currencies and digital assets. An increase in stablecoin supply is often used as a signal to predict an upcoming bull market rally, as it suggests investors are accumulating stablecoins before investing in cryptocurrencies. Masu.
An increase in USDT supply could fuel the next Bitcoin (BTC) rally. In August, Tether minted $1.3 billion in USDT in five days after Bitcoin prices bottomed at a five-month low of over $49,500 on August 5th.
By August 9th, with $1.3 billion in USDT, Bitcoin was trading at $60,271, recovering more than 21% from the market low on August 5th.
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Can $120 Billion USDT Fuel Bitcoin’s “Uptober” Rise?
The increase in Tether’s stablecoin supply could fuel the next “Uptober” (cryptocurrency slang term for October) rally, as it is historically a bullish month for Bitcoin prices.
Looking at Tether’s flow of funds, a significant portion is being sent to some of the largest centralized exchanges (CEXs), indicating buying pressure from investors.
In the past 48 hours, Tether’s Treasury transferred $66 million worth of stablecoins to Binance and $20 million worth of USDT to the Kraken exchange, according to data from Arkham Intelligence.
Tether treasury outflow. Source: Arkham Intelligence
Conversely, a lack of stablecoin inflows often causes a correction in the cryptocurrency market. On August 12, Bitcoin price fell below the psychological mark of $60,000, marking a correction of nearly 4% as financial institutions temporarily halted purchases of USDT.
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Could Bitcoin make a breakout by the end of October?
Based on historical chart patterns, some analysts expected Bitcoin to rise to $92,000 in three months after a downtrend in September.
According to CoinGlass data, October is historically the second best month for Bitcoin prices, with an average return of 21%, second only to November, where Bitcoin’s average monthly return exceeded 46%. There is.
Bitcoin monthly return rate. Source: Coin Glass
The last Bitcoin halving in 2020 saw prices rise more than 27% in October and more than 42% in November during a six-month bull market that ended in March 2021.
According to popular crypto analyst Recto Capital, Bitcoin needs to end the week above $68,700 to see a chance of breaking out of its current crabbing.
BTC/USD, 1 week chart. Source: Rekt Capital
Increased inflows to Bitcoin exchange-traded funds (ETFs) could contribute to Bitcoin’s potential breakout. The Bitcoin ETF surpassed a record $20 billion milestone in total net flows on October 17, just 10 months after its launch.
In contrast, gold-based ETFs took nearly five years to surpass the same $20 billion milestone.
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