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Bitcoin and other cryptocurrencies are now stuck in a market rut. After prices fell at the end of May, the bullish comeback hasn’t been easy. While the sector has seen its fair share of good developments and signals of reversal, significant improvements have yet to materialise since the May 19th disaster.
Tether reserves on exchanges have kept the optimistic story alive in various ways. However, it may be time to add another point of view; to recognise that things may not continue to follow past variables, which were essentially optimistic previously.
Is USDT going to pull Bitcoin down, and push Ethereum and other altcoins up?
Over the last three years, stablecoins have become an essential aspect of the business. Assets like as USDT, USDC, and others have increased liquidity in the industry and have frequently served as crypto reserves during volatile markets. We are now in the midst of a bumpy trading day, and a rebound is predicted when large USDT holders begin buying back in.
The Stablecoin Supply Ratio, or SSR, has been found as a market positive bias. When the SSR ratio is low, it is assumed that the stablecoin supply has greater “buying power” to acquire Bitcoin, causing the market to rise. Historically, it was noticed in the first half of 2018.
However, the landscape might have changed now.
Only a few big assets, including as Bitcoin, Ethereum, and Litecoin, have stablecoin pairings on exchanges in 2017-2018. The supply remained limited, and the movement was more reactive. Because most crypto assets now have a USDT pairing on platforms, the market dynamics have radically shifted. As a result, the SSR ratio cannot be regarded as a ‘buying power’ for solely BTC.
The arrival of DeFi complicates matters even further, since the need for stablecoin yields has grown in popularity. As demand for stable assets grows, the market may reach a stage where USDT has less of an influence on Bitcoin’s movement.
Taking things with a grain of salt while analysing changes
With an increasing number of investors, institutions, and interest, the cryptocurrency market is no longer simple, let alone the elements that determine a bull-run. USDT and other stablecoins will continue to have an impact on Bitcoin and altcoin movement, but it will be less definite than it was previously.
Tether reserves on exchanges have lately decreased as well, although the impact on BTC’s price has not been entirely favourable. The digital asset class is changing, and USDT is now a part of that story.