Tether’s US dollar-denominated stablecoin has surpassed $120 billion in market capitalization for the first time, signaling a potential cryptocurrency rally.
The USDt (USDT) of Tether, the world’s largest stablecoin, surpassed $120 billion on October 20, according to the Tether website, which provides real-time updates on stablecoin supply.
Tether tokens are in circulation. Source: Tether.to
Stablecoins are the main gateway between the worlds of fiat and digital assets. Increasing stablecoin supply is often used as a signal to predict an upcoming bull rally. This is because it suggests that investors are investing in stablecoins before investing in cryptocurrencies.
An increase in USDT supply could help fuel the next Bitcoin (BTC) rally. On August 5, after the price of Bitcoin bottomed above $49,500, its lowest level in five months, Tether minted $1.3 billion USDT in five days.
By August 9, USDT worth $1.3 billion had helped Bitcoin recover more than 21% from the market bottom on August 5 to trade at $60,271.
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Could $120 Billion USDT Fuel an “Uptober” Bitcoin Rally?
An increase in Tether’s stablecoin supply could fuel the next “Uptober” rally (cryptocurrency slang for October), as this has historically been a strong month for Bitcoin prices.
Looking at Tether’s fund flow, we can see that a significant portion of it is being transferred to some large centralized exchanges (CEXs), creating buying pressure from investors.
According to Arkham Intelligence data, in the last 48 hours, Tether’s treasury sent $66 million worth of stablecoins to Binance and $20 million worth of USDT to the Kraken exchange.
Tether funds are outflow. Source: Arkham Intelligence
Conversely, a lack of stablecoin inflows often leads to cryptocurrency market corrections. On August 12, the price of Bitcoin fell below the $60,000 psychological line and saw a correction of nearly 4% as institutions temporarily stopped buying USDT.
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Can Bitcoin Breakout Before the End of October?
Based on past chart patterns, some analysts expected Bitcoin to rise to $92,000 in the three months following its September downtrend.
According to CoinGlass data, October is historically the second-best month for Bitcoin prices, with an average return of 21%, and November is the second-best month, with Bitcoin’s average monthly return above 46%.
Bitcoin monthly returns. Source: Coinglass
During the Bitcoin halving in 2020, the price rose more than 27% in October and 42% in November in a six-month rally that lasted until March 2021.
According to renowned cryptocurrency analyst Rekt Capital, Bitcoin would need to close the week above $68,700 to confirm a potential breakout of its current crap walk.
BTC/USD, 1-week chart. Source: Rect Capital
Rising Bitcoin exchange-traded fund (ETF) inflows could contribute to a potential breakout for Bitcoin. The Bitcoin ETF surpassed a record $20 billion in total net flows on October 17, just 10 months after its launch.
In contrast, a gold-backed ETF took nearly five years to achieve the same $20 billion goal.
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