According to TradingShot, Bitcoin investors should prepare themselves for a further upturn as a large tether supply is waiting to come to the market.
According to the independent market research firm, USDT supply has increased by more than 50 percent since August 2020. Although it may have fueled the 18 percent price recovery in the Cryptosoft market a month later, its actual impact on the crypto-currency spot rate remains undiscovered.
Correlation Bitcoin-USDT market capitalization. Source: TradingView.com
„The purchasing power of cryptography has increased considerably, and this power has not yet been reflected in price actions“
Historically, Tether’s USDT has been the leading indicator of Bitcoin price. In November 2018, for example, the BTC/USD exchange rate fell by 46 percent.
The move came almost six weeks after USDT experienced a 44 percent drop in supply. In May 2019, the number of USDT coins in circulation also rose by 30 percent.
Then the Stablecoin followed the rise in the BTC/USD exchange rate from USD 5,700 to USD 11,350.
In these cases, Bitcoin lagged behind the USDT market capitalization. TradingShot comments the same in the current rally of the crypto currency, which took place almost a month after the rise in USDT supply.
Bitcoin accumulation continues
Other on-chain indicators also acted as a tailwind for the ongoing Bitcoin price rally. TradingShot underlines the strong accumulation sentiment in recent weeks despite the correction of BTC/USD from $12,000 to $10,000.
„The price is generally going into a bullish trend with increasing accumulation of smart money in the chain,“ the company said. „In November 2018, the $6,000 level experienced an accumulation of smart money, and the price fell to 3,000 over the next two months, with further accumulations taking place.
While BTC, which accumulated at 6,000, suffered a loss of nearly 50%, the price soon rose to 12,000+, generating a 2x.
Prospects for the Bitcoin market as presented by TradingShot.
A similarly growing accumulation mood was also evident among the miners – they are responsible for operating Bitcoin’s decentralized network and receive the newly minted Bitcoins. Normally, the Miners sell a good portion of their rewards to cover their operating costs.
If their higher ask price matches the bid, this means that the market is willing to pay more to accumulate Bitcoin – and vice versa. TradingShot explains that investors are buying Bitcoin en masse, which is why there have been massive sell-offs without violating its bullish bias.
„If the stock market falls by more than 10%, BTC will fall,“ the company writes.
„For most investors, the hedge for a low interest rate environment or political uncertainty is still gold over crypto. And even though BTC may recover faster than stock indices, the initial reaction at that point in time is probably still correlated.“
With the higher USDT market capitalization and inflationary outlook for the future, the analysis concludes that demand for Bitcoin among mainstream investors will increase.