Stalled USDT Liquidity Threatens Bitcoin Price Further Growth – Here’s Why
July 20 2024 - 8:00AM
NEWSBTC
The price of Bitcoin has maintained a recovery trajectory over the
last week, gaining by a significant 16.25% to move briefly above
the $67,000 price mark. Bitcoin investors are likely hopeful the
asset will record more price gains and finally embark on a bull run
following the halving event in April. However, Bitcoin’s price
future gains are theorized to be tied to multiple factors including
the liquidity of the stablecoin market. Why A Stagant USDT
Liquidity Is Harmful To Bitcoin? In an X post on Friday, prominent
on-chain analytics platform CryptoQuant emphasized the importance
of stablecoin liquidity to an appreciation in Bitcoin’s price.
CryptoQuant stated that for premier cryptocurrency to experience
further price increases, there is a need for an equal rise in the
stablecoin market shares. Related Reading: Coinbase Analysts Warn:
Bitcoin’s Upward Trend Could Hit a Wall — Here’s Why For
context, stablecoins refer to a type of cryptocurrency with a fixed
value that is usually pegged to a reserve asset, usually the US
dollar. These assets are combined valued at $163.56 billion and are
critical to digital asset adoption for users with a fear of market
volatility. In relation to Bitcoin’s price, CryptoQuant
specifically references Tether (USDT), the largest stablecoin and
third largest cryptocurrency with a market cap value of $113.78
billion, as a major influencing factor. The analytics team
explains that USDT’s growth in the last month has been near 0%
(1.03%), thus suggesting a slight 3.21% increase in Bitcoin’s price
over the same period. In contrast, USDT’s market shares grew by
6.6% in March 2024, the same time in which Bitcoin rose from
$61,168 to secure a new all-time high at $73,750. The relationship
between both assets could stem from the prominent use of USDT in
crypto trading. Thus, a higher level of USDT liquidity could allow
traders to increase demand for risky assets, including Bitcoin.
According to CryptoQuant, the Bitcoin market, therefore, requires a
rapid rise in stablecoin liquidity to maintain its current positive
price performance. Related Reading: Bitcoin Bollinger Bands
Squeezing: Is BTC Ready For $140,000? Analyst Highlights
“Dangerous” BTC Price Level In other news, amidst Bitcoin’s current
price rally, popular crypto analyst Ali Martinez has warned that
Bitcoin must maintain its price above the $66,385 level to avoid a
massive liquidation of about $42.67 million. At the time of
writing, Bitcoin continues to trade at $66,571 with a notable 4.65%
gain in the last day. In a similar fashion, the asset’s daily
trading volume is up by 38.08% and valued at $37.2 billion.
Featured image from Big Stock Photo, chart from Tradingview.com
Bitcoin (COIN:BTCUSD)
Historical Stock Chart
From Jul 2024 to Aug 2024
Bitcoin (COIN:BTCUSD)
Historical Stock Chart
From Aug 2023 to Aug 2024