FameEX Hot Topics | Stablecoin Issuance May Drive 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 believes could be the catalyst for a Bitcoin rally. According to Markus Thielen, a leading market researcher at 10x Research, the surge in stablecoin issuance could signal a new wave of capital entering the crypto market, potentially driving Bitcoin prices higher.

In the first half of last week alone, nearly $2.8 billion was issued by Tether and Circle, suggesting that institutional investors may be injecting fresh funds into the market. Thielen stated on August 14 that if the trend of stablecoin issuance continues, it could lead to further upward momentum for Bitcoin. “If this trend of issuance (not just minting) continues, Bitcoin could see further gains,” he said. Since August 9, Bitcoin has been trading between $58,000 and $62,000, after recovering from a dip to $55,000.

However, Thielen cautioned that breaking above the $60,000 to $61,000 resistance zone would require more than just a lower Consumer Price Index (CPI), which is a key indicator of inflation in the United States. The July CPI report, which is a crucial measure of inflationary pressures, was due on August 14. Thielen emphasized that a sustained Bitcoin rally would need “real money buying through stablecoins,” noting that a strong stablecoin inflow is crucial to making the breakout sustainable, particularly as other factors have had less impact on Bitcoin’s rally this year.

Thielen also pointed out that while Bitcoin’s current price action “looks promising” if it stays above $60,000, the rally could lose steam without stronger stablecoin inflows. On August 13, Tether minted $1 billion in USDT, although this was intended for inventory building rather than immediate issuance, according to Tether’s CEO, Paulo Ardoino.

Tether’s market capitalization has risen by approximately $1 billion over the past week, reaching a record high of $115.6 billion, as per Tether’s transparency report. Circle’s market capitalization has also grown by 4.5% since the beginning of August, bringing the total USDC in circulation to $34.5 billion.

Thielen noted that Circle’s stablecoin flows likely originated from U.S. institutions taking advantage of the market dip. However, he concluded that without additional factors, such as changes in the macroeconomic environment, a more accommodative Federal Reserve, or a shift 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.