The cryptocurrency market has remained relatively quiet over the past few weeks. This has raised concerns that Bitcoin and altcoins will fall.
Nevertheless, market observers maintain that a bullish cycle is still likely, due in part to stablecoin inflows.
Expansion of stablecoin market
Blockchain analysis firm IntoTheBlock said stablecoin market capitalization is recovering strongly. Various assets in the industry, including USDT and USDC, have increased by more than $9 billion since October 2023. Currently, the market capitalization of stablecoins is $133 billion.
This surge reflects the new strength of the stablecoin sector and highlights the massive injection of liquidity into the crypto industry. Additionally, this increase is a promising indicator of growing investor confidence in the possibility of a bullish market trend beginning.
“Stablecoin market capitalization has rebounded strongly, increasing by more than $9 billion since October 2023. The sustained upward trend further strengthens the likelihood of a bull market cycle ahead.” said IntoTheBlock.
Crypto analyst Zaia offered a more nuanced explanation. According to analysts, stablecoins are a “bridge” between traditional finance and the crypto industry. Therefore, the jump in market capitalization indicates that “the bridge is widening to accommodate more crypto enthusiasts.”
Interestingly, Tether’s USDT leads the stablecoin space with a market capitalization of $96 billion. However, JPMorgan analysts expressed concerns about USDT's dominance and highlighted significant risks to the industry. Instead, it supports USDC because of Circle's regulatory compliance.
A catalyst for further growth
Industry experts believe that the impending Bitcoin halving and the recent approval of a Bitcoin ETF, in addition to the increase in stablecoin market capitalization, will lead to a rally in cryptocurrencies.
A recent study reveals increasing optimism about the impact of the halving on Bitcoin prices. Almost 84% of investors believe this will help push Bitcoin to greater heights.
“More than half of respondents expect the price of Bitcoin to be in the $30,000 to $60,000 range at the time of the halving (around April 2024), while 30% believe the price will exceed $60,000. ,” Biggett revealed.
Similarly, the newly launched Bitcoin ETF further sets the stage for potential upward momentum in the crypto market. Observers point to the early success of these ETFs as a sign that they can have a major impact on the overall market.
“The Spot Bitcoin ETF received ~$700 million in net flows this week alone. Truly amazing. People continue to overestimate the ETF’s short-term impact and vastly underestimate its long-term impact.” said Matt Hogan, Bitwise CIO.
Disclaimer
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