Years later, when we look back to 2020, we might call it “The Year of Cryptocurrency,” for we get to not only experience the third halving of Bitcoin but also witness an unprecedented surge of Stablecoin supply since March. Up to September 12, the total market cap of four major stablecoins reached $17.65 billion, among which Tether (USDT) made up most of the total, amounting to $14.32 billion.
As indicated by the data of Coincodex.com, the total market cap in March was just shy of $5 billion (it had stayed at $5 million for 8 months), then it surged to $17.65 billion within six months. Such a significant boost naturally aroused heated debates about the cryptocurrency market and a majority of investors believe the boost of stablecoins’ supply suggests a Bitcoin binge.
USDT Supply Indicates Bitcoin Buying Power
Stablecoins are widely used as a de facto form of cash in the cryptocurrency market. Since their market value is pegged to some external reference, they are more “stable” in price compared with Bitcoin. Compared with fiat money, they have the advantages of blockchain digital assets in instantaneous money movement and easier payments, which enable traders to easily convert their stablecoins into fiat money or other cryptocurrencies. Besides, in some countries such as China and Russia where Bitcoin is banned from banking transactions, traders tend to exchange their fiat into stablecoins, hold them, and buy other cryptocurrencies when the right time comes.
Over the past few years, there seems to be a correlation between USDT’s market cap and Bitcoin’s price movements. One side of USDT’s Bitcoin buying power is that when the price of Bitcoin goes up, the same amount of Bitcoin requires traders to pay more, so more fiat money would need to flow into the market, thus driving the supply of USDT up. In turn, the increased supply of USDT could indicate a rise in Bitcoin’ price.
The Market is Preparing For A Bitcoin Peak
Currently, the total supply of USDT is $14.4 billion, taking up 4.1% of cryptocurrency. Tether recently minted 250,000,000 USDT could be a signal that more investors flock to bitcoin and altcoins to hedge against inflation and gloomy economic prospects.
Many critics consider the new issuance of USDT the result of growing confidence in Bitcoin’s price expansion after the halving, as traders in anticipation of a bull market will get prepared to funneling their USDT into Bitcoin. This hypothesis is supported by a survey by Glassnode, in which data showed an increase in Bitcoin whales who flocked to the Bitcoin market since Bitcoin took a nosedive in March. Besides, the increase of USDT could contribute to the boom in new investors in the hope of benefiting from the rebuilding boom of Bitcoin, which recently tested the $12,000 crucial level.
Planning Ahead for The Bull Market
Each USDT could be the momentum Bitcoin needs to skyrocket. If we take a look at history, the Bitcoin bull run always came after the previous halving events. At the first halving, Bitcoin’s price surged from $11 to over $1,100 in one year. As for the second halving, the price soared from $600 to $20,000 by the end of 2017. The same could be applied to the third halving, however, this process might take months to happen, so it is advised to diversify our strategies – be bold while staying safe.
Here are two options worthy of trying while waiting for the bull:
Option 1: A Wallet Designed for Traders and HODLers
You might want to continue to hodl your BTC and wait for the bull market to come after the halving. However, as we don’t know how long it will be until the next bull market, meanwhile you could consider storing your BTC into an interest-bearing wallet, where your deposit could gain up to a 30% annualized interest rate.
Option 2: Managing Trading with Less Risks
Besides buying more BTC and waiting for the bull market, you could earn additional BTC with leveraged trading, which allows traders to open a leveraged position X times more than their actual capital. By predicting the right trends of Bitcoin’s price, traders can earn greater returns within a shorter period of time. Bexplus, a leading cryptocurrency leverage trading platform, even offers a 100x leverage. Even at times of great volatility, you can generate profits with the help of Bexplus. And its Stop Loss & Take Profit options could help you lower the risks and lock in profits.
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