Tether, the largest stablecoin in the world, has achieved a significant milestone by surpassing a market capitalization of $120 billion, according to data from the company’s website. This achievement has sparked speculation about a potential rally in the cryptocurrency market.
Stablecoins serve as a bridge between traditional fiat currencies and digital assets. An increase in the supply of stablecoins is often seen as a sign that investors are preparing to invest in cryptocurrencies, which can lead to a bull rally.
The growing supply of Tether’s USDT stablecoin could potentially fuel the next rally in Bitcoin. In August, Tether created $1.3 billion worth of USDT in just five days after Bitcoin’s price hit a five-month low of over $49,500. By August 9, this infusion of USDT helped Bitcoin recover by more than 21%, reaching a price of $60,271.
There is speculation that Tether’s expanding stablecoin supply could catalyze a rally in October, also known as “Uptober” in the crypto community. Historically, October has been a bullish month for Bitcoin. Additionally, Tether’s treasury flows indicate significant amounts of stablecoins being sent to major centralized exchanges, suggesting increased buying pressure from investors.
Conversely, a lack of inflows of stablecoins can lead to a correction in the crypto market. In August, when institutions temporarily stopped buying USDT, Bitcoin experienced a nearly 4% correction, falling below the psychological mark of $60,000.
Based on historical patterns, some analysts predict that Bitcoin could rally to $92,000 after a downtrend in September. October has been the second-best month for Bitcoin in terms of price performance, with average returns of 21%, second only to November, which sees average monthly returns of over 46%.
In 2020, during the year of the previous Bitcoin halving, the price rose by over 27% in October and over 42% in November, leading to a six-month rally that lasted until March 2021.
To confirm a potential breakout from its current sideways movement, Bitcoin needs to close the week above $68,700, according to crypto analyst Rekt Capital.
The growing inflows into Bitcoin exchange-traded funds (ETFs) could also contribute to a breakout in the price of Bitcoin. Bitcoin ETFs recently surpassed the milestone of $20 billion in total net flows, just 10 months after their launch. In comparison, it took gold-based ETFs nearly five years to reach the same milestone.
Overall, there is anticipation and speculation about a potential rally in Bitcoin before the end of October, based on historical trends and market indicators.