The stablecoin market cap, excluding algorithmic stablecoins, has reached $168 billion, its highest point in history. 

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Bitcoin (BTC), the largest cryptocurrency by market capitalization, closed January above the $40,000 threshold, signaling positive price action. However, market expert Justin Bennett suggests that Bitcoin’s bottom has yet to be reached. 

Bennett’s analysis highlights the possibility of further price declines, with Tether’s stablecoin USDT dominance (USDT.D) chart indicating potential downward movements. 

Tether Dominance Signals Concerns For BTC’s Price

Bitcoin’s recent price recovery and ability to surpass the $40,000 level have provided optimism among investors. Nevertheless, Bennett believes further price declines could follow a retest of the mid $44,000 range. 

Bennett highlights the inverse relationship between Tether dominance and Bitcoin. According to his analysis, the levels on the Tether dominance chart since October have been reliable indicators for Bitcoin’s price movements. 

According to Bennett’s analysis, as depicted in the chart above, Tether’s dominance may experience a potential increase from its current level of 6%. This increase could bring it closer to the 8% mark. 

In such a scenario, Bitcoin’s performance would likely move in the opposite direction, indicating potential price declines soon.

On January 25, Bennett suggested that Bitcoin could drop another 20% from its current levels, which would place it around $30,000. If this scenario plays out, it would be crucial for Bitcoin bulls to defend the $30,000 level to maintain the current bullish structure.

A drop below $29,000 would give bears a stronger position, with only three major support lines remaining at $28,400, $25,900, and $24,000 before a potential retest of the $20,000 mark. 

The performance of these support levels and Bitcoin’s ability to withstand increased selling pressure will be key factors to monitor. The future market sentiment will also play a significant role in determining Bitcoin’s price trajectory.

Bitcoin Witnesses Stellar Accumulation Trend

Despite the possibility of further price drops, renowned crypto analyst Ali Martinez has shed light on a notable trend in BTC’s recent accumulation streak by investors.

According to Ali Martinez’s analysis, Bitcoin is experiencing a significant accumulation streak, rivaling some of the most notable periods observed over the past few years. 

The Accumulation Trend Score, a metric that gauges the buying activity of larger entities, has remained consistently high, hovering near 1 for the past four months.

This suggests that influential market participants are actively accumulating Bitcoin, signaling their confidence in the long-term potential of the cryptocurrency. 

Martinez’s observations further indicate that Bitcoin’s price range around $42,560 has emerged as a highly significant interest zone. 

Within this range, an impressive total of 912,626 BTC has been transacted. This is expected to be a significant support level, potentially preventing further downside movements and fostering increased buying interest.

These trends collectively contribute to a positive market outlook, suggesting that despite potential price drops, Bitcoin remains an attractive asset for long-term investment.

Featured image from Shutterstock, chart from TradingView.com 

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Data shows that the Tether (USDT) market cap is almost $90 billion. Here’s why this growth could matter for the price of Bitcoin.

Tether Market Cap Has Continued To Observe A Rise Recently

Tether is a cryptocurrency pegged to the US Dollar, meaning its price remains stable around the $1 mark. The asset is the most famous such “stablecoin” in the sector, with its market cap outstripping any other stable’s.

As the market intelligence platform IntoTheBlock pointed out, the largest stablecoin supply has only continued to grow recently. The chart below shows the trend in the market caps of the various stablecoins in the cryptocurrency sector over the past year.

As displayed in the above graph, Tether has observed an overall uptrend during the past year, while USD Coin (USDC), the next largest competitor, has observed outflows as its market cap has fallen.

The chart also puts into perspective how small the other stables are when compared to these two assets, making them perhaps insignificant for the wider market.

What relevance does a large stablecoin like Tether have for Bitcoin and other coins in the sector? The answer to that question lies in what the stablecoins represent.

Generally, investors make use of stables whenever they want to avoid the volatility associated with the other assets in the sector. The holders keeping their capital locked in these fiat-tied tokens usually plan to return towards the volatile side, however, as they would have gone for fiat itself if they wanted to keep away from cryptocurrency altogether.

When such investors finally move back towards coins like Bitcoin, they naturally put buying pressure on their prices. For this reason, the supply of stablecoins could be considered the “potential buying supply” for BTC and others.

There are two ways the USDT market cap grows. The first is an influx of fresh capital directly going to the asset, which is naturally a bullish development as it means the total capital in the sector goes up.

The second is through a swap from another coin like Bitcoin. In this case, the overall capital present in the sector wouldn’t change, as it’s just a reshuffling, but whatever asset is being sold in favor of the stablecoin would naturally see some decline.

The most bullish scenario for the market is, therefore, when both the BTC price and Tether market cap head up, as it implies, a fresh influx of capital is happening towards both the coins.

As analyst James V. Straten explained in a post on X, the correlation between the USDT market cap and BTC has almost hit 100% during this latest rally, as both have shot up.

The USDT market cap continuing to grow in these circumstances is certainly an optimistic sign for the current rally, as it means that all this dry powder that’s accumulating could potentially be deployed into Bitcoin should the surge slow down, helping extend the move further.

BTC Price

Bitcoin had breached the $44,000 mark earlier in the past day, but the asset has since seen some pullback as it’s now back around $43,800.

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