FameEX Hot Topics | Stablecoin Issuance Could Fuel the Next Bitcoin Rally

Over the past week, Tether and Circle have issued more than $2.5 billion in stablecoins, a development that 10x Research suggests could act as a catalyst for a potential Bitcoin rally. Markus Thielen, a prominent market researcher at 10x Research, believes this surge in stablecoin issuance may indicate a fresh influx of capital into the crypto market, which could drive Bitcoin prices higher.

Specifically, nearly $2.8 billion in stablecoins was issued by Tether and Circle in the first half of last week alone. This significant increase hints at the possibility that institutional investors are injecting new funds into the market. On August 14, Thielen noted that if this trend of stablecoin issuance continues, it could generate upward momentum for Bitcoin. “If this trend of issuance (not just minting) continues, Bitcoin could see further gains,” he explained. Since August 9, Bitcoin has been trading within the $58,000 to $62,000 range, having rebounded from a dip down to $55,000.

However, Thielen cautioned that for Bitcoin to break above the critical $60,000 to $61,000 resistance zone, more than just a lower Consumer Price Index (CPI) will be needed. The CPI, which is a key measure of inflationary pressures in the United States, was due to be released on August 14. Thielen stressed that a sustained Bitcoin rally would require “real money buying through stablecoins,” pointing out that strong inflows of stablecoins are essential to maintaining a breakout, especially since other factors have had less impact on Bitcoin’s rally this year.

Thielen also highlighted that while Bitcoin’s current price action appears promising if it can hold above $60,000, the rally could lose momentum without continued strong stablecoin inflows. On August 13, Tether minted $1 billion in USDT, although this was for inventory purposes rather than immediate issuance, according to Tether’s CEO, Paulo Ardoino.

Tether’s market capitalization has grown by roughly $1 billion over the past week, reaching a new record high of $115.6 billion, according to Tether’s transparency report. Circle’s market capitalization has also increased by 4.5% since the start of August, with the total USDC in circulation now at $34.5 billion.

Thielen observed that Circle’s stablecoin flows likely originated from U.S. institutions capitalizing on the market dip. However, he concluded that without additional factors—such as changes in the macroeconomic environment, a more accommodative Federal Reserve, or shifts in the political landscape—“Bitcoin will likely remain sluggish in short-term trading.”

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.