Apparently the bull trend that emerged in the summer is over: Bitcoin, Ethereum and other top coins have entered a strong consolidation pattern in recent weeks.
BTC, for example, has been trading in a range of $ 1,000 for the past six weeks
But investors do not believe that now is the time to relax: Fund manager Andrew Kang comments that it is not wise to take time off now. Kang, founder of Mechanism Capital, believes there is „a lot of cash on the sidelines“ with an „appetite for risk for both BTC and alts“.
That is, there is money waiting to enter the cryptocurrency markets, should there be a real catalyst – be it a positive fundamental development or price trends that point to further growth.
Rise in stablecoin supply improves outlook for bitcoin & crypto
The supply of US stablecoins in circulation recently passed the $ 20 billion mark, although that number was just a few billion at the beginning of the year.
This sharp surge in demand for stablecoins shows at least two things:
There is a demand for the US dollar to be deployed in the DeFi market.
There is an underlying demand for cryptocurrencies
Analysts hope that the strong influx of stablecoins in circulation will increase the opportunities for Bitcoin and other cryptocurrencies . Historical analysis has shown that the market capitalization of Tether’s USDT is somewhat correlated with the market capitalization of Bitcoin.
Companies such as CryptoQuant and Glassnode see the increasing number of stablecoins on the exchanges as positive for the market.
The „stablecoin supply ratio“ – a metric used by blockchain analytics companies to monitor how stablecoins‘ deposits on exchanges affect the price of bitcoin – gives a „strong buy signal“.
More than just stablecoins
Cash on the sidelines is not just about stablecoins. There is actually cash in bank accounts waiting on the sidelines to be deposited in Bitcoin, Ethereum and other cryptocurrencies.
Square made just that clear on Thursday when the company revealed it had bought Bitcoin with one percent of its available wealth – worth $ 50 million. Company boss Jack Dorsey has been promoting Bitcoin for a long time and calls BTC the best contender to become the local currency of the internet.
Spencer Noon, head of DTC Capital, also points out that there are waiting institutional investors who want to invest capital in Ethereum – in order to quietly enter the decentralized financial space.