A factor that predicted the Bitcoin crash in 2018 suggests bullish action is ahead 🚨 This article is 5 years old...
A factor that predicted the Bitcoin crash in 2018 suggests bullish action is ahead
2 min read
Updated: Apr. 25, 2020 at 9:27 am UTC
Photo by Jen Theodore on Unsplash
Over the past few days, you’ve 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.
? ? ? ? ? ? ? 60,000,000 #USDT (60,691,359 USD) minted at Tether Treasury
— Whale Alert (@whale_alert) March 19, 2020
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.
Why it’s bullish for Bitcoin
As to why this is bullish, Charles Edwards, a digital asset manager, noted earlier this year that “major changes in Tether’s market capitalization have led Bitcoin’s 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 2019’s 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.
Major changes in Tether's Market Cap have led Bitcoin's price over the last 1.5 years.
5 January 2020 was no different.
A healthy signal.
Keep it printing ?️ pic.twitter.com/dfe0dBJzwh
— Charles Edwards (@caprioleio) January 13, 2020
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 Bitcoin’s 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.
Theres an estimated $2B in cash sitting at crypto funds/holdcos. Theres another $2B+ sitting in stablecoins, and another $2B sitting at exchanges/silvergate/signature.
This is $6B fiat already onboarded to crypto to buy your bags. Imagine thinking we need new money to hit $10k.
— Su Zhu (@zhusu) February 18, 2019
It’s important to point out that as Tether’s 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 isn’t clear. However, going by historical standards, it may take weeks or even a few months before BTC catches up to USDT’s market capitalization — if the correlation holds true that is.
Bitcoin Market Data
At the time of press 9:27 am UTC on Apr. 25, 2020, Bitcoin is ranked #1 by market cap and the price is up 3.67% over the past 24 hours. Bitcoin has a market capitalization of $114.29 billion with a 24-hour trading volume of $39.96 billion. Learn more about Bitcoin ›
Crypto Market Summary
At the time of press 9:27 am UTC on Apr. 25, 2020, the total crypto market is valued at at $175.67 billion with a 24-hour volume of $129.77 billion. Bitcoin dominance is currently at 65.07%. Learn more about the crypto market ›
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Tether
$1.00109
Launched in 2014, Tether is a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner.