A new movement in the market for the stablecoin with the largest capitalization, tether (USDT), has increased bullish expectations about bitcoin (BTC) and cryptocurrencies. This is an increase in your supply.
Tether, the issuer of the stablecoin, has minted 1 billion USDT, which is equivalent to the same amount in dollars (USD). This action occurred yesterday, May 21, the day the market reacted upward to growing expectations that ETFs for the ether, will be approved in the United States.
The price of ETH registered a rise of more than 20% that day to almost USD 1,800, its maximum in two months, which increased its bullish projections. Meanwhile, BTC rose 10% to $71,000, its highest level in a month.
The issuance of USDT can be observed through the Etherscan explorer, which generated excitement on social networks for a possible continuation of the rise. “Buckle up,” analyst Lark Davis said about the initiative, for example, sharing the emoji of a rocket, a bullish symbol of the cryptocurrency market.
Paolo Ardoino, CEO of Tether and CTO of the Bitfinex exchange, clarified in response to this detected movement that it is about the replenishment of inventory on the Ethereum network. “Please note that this is an authorized but not issued transaction, which means that this amount will be used as inventory for issuance requests and on-chain exchanges for the next period,” he detailed.
This means that at the moment the massive amount of USDT, although it is issued, is not yet in circulation, but will be in circulation later. However, this move is considered strategic preparation for a potential market rebound.
“It means that this amount will be used as liquidity to boost the market before the ETF news,” commented Ivan Sherbakov, CEO of the CryptoRobotics trading platform.
Why does the issuance of USDT represent a potential rise for bitcoin and cryptocurrencies?
The reason why a minting of USDT represents a possible increase in the price of cryptoassets is that it indicates a potential inflow of capital into the market. Investors usually purchase the stablecoin to keep their funds without exposure to high market volatility, before purchasing volatile digital assets.
In this sense, an increase in the issuance of a stablecoin suggests that there is a growing demand for bitcoin and cryptocurrencies, which may lead to a rise in their prices.
Although the minting of stablecoins in general represents a bullish indicator, that of USDT is especially so, since it is the one with the largest market capitalization.
It should be noted that a stablecoin is a crypto asset that maintains the same price as a fiat currency, mainly the US dollar, as is the case with tether.
Currently, USDT has a capitalization of USD 111.7 billion. As seen below, this amount places it as the third largest crypto asset in the world, after BTC and ETH.
Capital inflows into bitcoin soar
The bullish signals for bitcoin are many, in addition to what was mentioned about USDT. Analyst Willy Woo highlighted that total capital inflows into bitcoin are beginning to increase again. This can be seen in the following graph, in which the net flows of the BTC ETFs are highlighted in light green.
“While everyone was scared that the bitcoin price had not increased in the last 2 months, the available BTC was being quietly bought,” emphasizes Woo. Furthermore, he highlights that what is even better is that this has happened while the supply of the coin decreased on exchanges , as seen below, which shows its appreciation.
For the analyst, with this scenario, “it is only a matter of time before BTC exceeds all-time highs.” Trading at around USD 70,000 at the time of writing, it is 5% away from surpassing the record price in its history, USD 73,700, which it set two months ago.
