A factor that predicted the Bitcoin crash in 2018 suggests bullish action is ahead – CryptoSlate

Over the past few days, youve likely noticed a lot of buzz about a trend in the crypto space: Tether, the company behind the USDT stablecoin, has begun to issue millions upon millions of their coin.

Below is one such transaction outlining a minting of USDT coins at the Tether Treasury, so to say. Although these millions may seem arbitrary in an industry worth over $100 billion, there is evidence to suggest that large mints of this crypto asset precede strong surges in the price of Bitcoin.

According to data shared by Unfolded, a cryptocurrency analytics group, $161 million worth of USDT has been minted within the past few days, while the circulating supply of the asset has grown by $627 million.

As to why this is bullish, Charles Edwards, a digital asset manager, noted earlier this year that major changes in Tethers market capitalization have led Bitcoins price over the last 1.5 years.

For instance, prior to the nearly 50 percent crash in November 2018 that saw BTC plunge from $6,000 to $3,150, the amount of USDT circulating fell by hundreds of millions; also, prior to the majority of 2019s 330 percent rally was the printing of hundreds of millions worth of the coins.

The millions of dollars worth of new stablecoins printed over the past few days would suggest that if this historical trend holds true, Bitcoin is about to see some strong upside and may be bottoming.

Fundamentally, this makes sense; although there are few details as to how one can deposit U.S. dollars and receive USDT in return, the introduction of fiat into the space through stablecoins should eventually act as a catalyst for Bitcoins growth when USDT holders sell their coins for BTC or other digital assets.

Su Zhu, CEO of Three Arrows Capital, summed it up nicely in 2019, when he wrote that with so much money sitting on the sidelines, especially in stablecoins, BTC could appreciate rapidly.

Its important to point out that as Tethers market cap has swelled, so too has that of USD Coin, the stablecoin by Circle and Coinbase, and that of alternate stablecoins by dozens of millions, further corroborating the bullish narrative that there is fiat money waiting on the sidelines to flood into Bitcoin.

How fast this translates into bullish price action for Bitcoin isnt clear. However, going by historical standards, it may take weeks or even a few months before BTC catches up to USDTs market capitalization if the correlation holds true that is.

Bitcoin, currently ranked #1 by market cap, is down 3.09% over the past 24 hours. BTC has a market cap of $112.5B with a 24 hour volume of $55.65B.

Chart by CryptoCompare

Bitcoin is down 3.09% over the past 24 hours.

Cover Photo by Jen Theodore on Unsplash

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A factor that predicted the Bitcoin crash in 2018 suggests bullish action is ahead - CryptoSlate

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