TL;DR
- Stablecoin Surge: Tether and Circle issued over $2.8 billion in stablecoins last week, potentially signaling fresh institutional capital entering the crypto market.
- Bitcoin’s Potential Rally: Continued stablecoin issuance could drive Bitcoin prices higher, but breaking the $60,000-$61,000 resistance requires more than just a lower CPI.
- Market Dynamics: Tether’s market cap hit a record $115.6 billion, while Circle’s USD Coin circulation grew by 4.5%, indicating significant institutional activity.
Stablecoin providers Tether and Circle have issued more than $2.8 billion worth of stablecoins over the past week. This surge in issuance has caught the attention of market analysts, with 10x Research’s head researcher Markus Thielen suggesting that this influx could be the catalyst for Bitcoin’s next major rally.
According to Thielen, the substantial issuance of stablecoins indicates that institutional investors are injecting fresh capital into the crypto market. He stated on August 14 that if this trend continues, it could lead to upward momentum for Bitcoin prices.
Bitcoin’s Current Price Action
Bitcoin has been trading between $58,000 and $62,000 since August 9, after recovering from a dip to $55,000. However, Thielen emphasized that for Bitcoin to break above the $60,000 to $61,000 resistance zone, a lower Consumer Price Index (CPI) alone won’t suffice. The July CPI report, a key measure of inflationary pressures in the United States, is due on August 14.
Thielen noted that a sustained Bitcoin rally would likely require “real money buying through stablecoins.” He pointed out that while Bitcoin’s price action looks promising if it can stay above $60,000, the rally could lose momentum without stronger stablecoin inflows.
Recent Developments in the Stablecoin Market
On August 13, Tether minted $1 billion of its Tether token, although this was for inventory building rather than immediate issuance, according to Tether CEO Paulo Ardoino. Tether’s market capitalization has increased by around a billion dollars over the past week, reaching a record $115.6 billion.
Meanwhile, Circle’s market capitalization has grown by 4.5% since the beginning of August, with $34.5 billion in USD Coin now in circulation. Thielen noted that these flows likely originated from U.S. institutions capitalizing on the dip, given Circle’s ties to more regulated counterparties than Tether.
Future Outlook for Bitcoin
Thielen concluded that without other factors, such as a changing macro environment, a more accommodative Federal Reserve, or political developments, Bitcoin might remain sluggish in short-term trading. However, BTC prices have gained 3.2% on the day, topping $61,000 during early trading on August 14.
