The surge in stablecoin issuance might be the key to sustaining Bitcoin’s rally, according to Marcus Thielen, founder and CEO of 10x Research.
#Bitcoin Traders Speculate on Potential Bullish Impact of $2.5 Billion Stablecoin Inflow
?1-10) Monitoring and analyzing crypto money flows is crucial for assessing market conditions that can act as tailwinds or headwinds for Bitcoin and other cryptocurrencies. #Traders are… pic.twitter.com/YVXkDPjaxt
— 10x Research (@10x_Research) August 14, 2024
In the past week, issuers of the largest stablecoins by market capitalization, Tether and Circle, have released assets worth nearly $2.8 billion. Thielen estimates this indicates that “some institutional investors are injecting fresh capital into the cryptocurrency market.”
“If this issuance trend (not just minting) continues, Bitcoin could see further growth,” the analyst noted.
Thielen believes that favorable consumer inflation data from the US alone will not be sufficient for digital gold to overcome the $60,000-61,000 resistance zone.
Sustainable growth will likely require “real money purchases via stablecoins.” This factor has been crucial for the resilience of price breakouts since the beginning of the year, while others have had less impact, Thielen emphasized.
Tether CEO Paolo Ardoino, commenting on the company’s issuance of 1 billion USDT on Ethereum on August 13, confirmed the analyst’s view that this does not mean the coins will immediately enter the market. The head of the issuer stated that the amount is authorized as reserves for future demand and cross-chain swaps.
PSA: 1B USDt inventory replenish on Ethereum Network. Note this is an authorized but not issued transaction, meaning that this amount will be used as inventory for next period issuance requests and chain swaps.
— Paolo Ardoino ?? (@paoloardoino) August 13, 2024
According to CoinGecko, USDT’s market capitalization has reached a record $116.2 billion. Circle’s USDC has increased by 4.5% since the beginning of August, reaching $34.5 billion.
“Given Circle’s connections with more regulated counterparties than Tether, these flows likely originated from American institutions taking advantage of the downturn,” Thielen believes.
However, without other factors such as changes in the macroeconomic situation and a more adaptive policy from the Federal Reserve, “in the short term, Bitcoin will continue to trade sluggishly,” the expert concluded.
Earlier, Thielen identified concerns about the economic resilience of the US as the main reason for the first cryptocurrency’s plunge in early August.
Analysts at Bernstein reached a similar conclusion.