If Bitcoin reacts to the recent substantial printing of more Tether stablecoins the same as it has in the past, we may finally have a catalyst for the crypto asset retesting its former all-time high.
According to an ongoing correlation that suggests Bitcoin pumps with each new chapter of the Tether saga, the leading cryptocurrency by market cap’s story in 2020 could be capped off with a very happy ending.Will Bitcoin Explode In Price After Tether’s Market Cap Adds $5 Billion in Supply?
Crytocurrency investors are watching in wait for confirmation that the new bull market in Bitcoin is here. A bullish retest in progress is the closest thing to a confirmation yet, and if it holds, the crypto market will gain some added momentum.
However, another unexpected factor could help favor a bullish breakout and further upside in the leading cryptocurrency by market cap. The parent company behind Tether has just since the cryptocurrency traded below $4,000. Then, an over 100% increase in market cap appears to have sent Bitcoin soaring. Prior to the pump, pulling Tether from the market led to Bitcoin’s collapse to its bear market bottom.Related Reading | Early Bitcoin Investor Sees Parallels Between Now And 2016 Bull Breakout
Clearly, there’s a correlation between the crypto asset pump and dumping, and how much Tether is free-flowing in the market. Following the 2019 rally triggered thanks to the Tether printer moving full steam, several much smaller supply increases throughout 2020 have had a similar impact. Each new printing of fresh stablecoins, causes Bitcoin bulls to roar. But the latest boost to Tether’s market cap is the largest since the 2019 rally, which sent Bitcoin skyrocketing from $3,200 to $13,800. Could another similar rally be next?
BTCUSD Tether Market Cap Price Action Correlation Chart | Source:
Why Does Stablecoin Supply Seem To Influence Crypto Asset Valuations?
Price charts never lie, and there’s a definitive correlation between Tether supply and the top crypto asset’s price increasing.With each round of new USDT minted, bulls gain confidence and push prices higher. It is not quite clear why this correlation exists, but past claims of price manipulation have never been proven.
Related Reading | Bitcoin Reaches 144 Weeks From All-Time High: Why This Number Matters
More Tether seems to suggest that Bitcoin is ready for new bear market highs, potentially taking out targets at $14,000 where the last rejection took place or higher. If an over 100% increase in Tether supply in the past led to a 300% and $10,000 price increase in Bitcoin, an over 40% rise from current levels could take Bitcoin to over $14,000 and set a new bear market high.A higher-high on weekly and monthly timeframes could be a significant signal to bulls that the bull market is starting, and it could provide the momentum needed to retest $20,000.
The boost in Tether market supply also comes just as the asset reaches 144 weeks since its all-time high, and is mid-testing former bear market downtrend resistance as support.
Featured image from DepositPhotos, Charts from TradingView