Tether’s USDT achieved a historic market capitalization of $120 billion on October 20, 2024. The crypto community has speculated that a rise in USDT could trigger a traditional “up-to-bar” rally in Bitcoin. Analysts stress that Bitcoin needs to close above $68,700 to confirm a potential breakout.
Tether’s USDT, the world’s largest stablecoin, reached an unprecedented market capitalization of $120 billion on October 20, 2024, according to data on Tether’s website. This significant increase sparked speculation in the crypto community about the possibility of an “up-to-bar” rally, a term used to describe Bitcoin’s historical trend toward price increases in October.
Source: Tether.to
Stablecoins as a bullish signal
Stablecoins such as USDT play an important role in the cryptocurrency ecosystem as a bridge between traditional fiat currencies and digital assets. Tether’s USDT is pegged to the US dollar, offering investors a way to preserve value without the volatility inherent in most cryptocurrencies. An increase in the supply of stablecoins, like the current expansion of USDT, is often interpreted as a bullish indicator. Investors typically accumulate stablecoins on the side to invest in riskier assets, such as Bitcoin, during periods of market optimism.
This bullish theory has been proven true in previous cases. In August 2023, after the price of Bitcoin fell to a five-month low of $49,500, Tether minted $1.3 billion worth of USDT in just five days. This coincided with a recovery in Bitcoin prices, which skyrocketed by 21% and reached $60,271 by August 9, 2023. This pattern has led many to speculate that similar trends may emerge after this latest milestone.
Can USDT drive Bitcoin’s “upward” rally?
Tether’s USDT market cap currently stands at $120 billion, and the crypto community is watching closely to see if this leads to another “upward” rally for Bitcoin. Historically, October has been one of Bitcoin’s strongest months, with an average return of 21%, according to CoinGlass data. This performance makes it the second-best month for Bitcoin, behind November, which had an average return of over 46%.
In 2020, the price of Bitcoin increased by more than 27%, and by another 42% in November. These gains were a precursor to a six-month rally that continued through March 2021. Analysts believe these gains could be replicated, especially with the current surge in USDT supply. Potential Catalyst.
Analysts like Recto Capital emphasize the importance of specific price levels to confirm a breakout in Bitcoin. According to Recto, Bitcoin needs to close above $68,700 by the end of the week to break out of its current sideways trading. If this happens, Bitcoin could see a significant price spike similar to its previous rally.
Apart from USDT growth, other factors could contribute to Bitcoin’s potential breakout. The rapid adoption of Bitcoin exchange-traded funds (ETFs) is a notable development. On October 17, just 10 months after its launch, Bitcoin ETF net inflows exceeded $20 billion, an all-time high. The rapid increase in investor interest through ETFs could spur further increases in Bitcoin prices.
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