Recently, the supply of stablecoins has shown significant growth, contributing to positive dynamics in the Bitcoin market. Investors are becoming more cautious, which may indicate a maturing cryptocurrency market.
Stablecoin Supply and Bitcoin’s Price Connection
Stablecoin supply and Bitcoin’s price show a strong correlation. For example, during the fourth quarter last year, the supply of stablecoins increased by 16.9%, reaching $188.82 billion. Concurrently, [Bitcoin's price (BTC)](https://coineagle.com/price/bitcoin/) rose from $67.8k to $106.1k. This trend confirms the dependence of market dynamics on liquidity.
Market Shifts Towards Caution
Bitcoin's recovery from $91k to $97k, a 6.6% increase in just a week, indicates that traders are preparing for the next big rally. During the same period, Tether USD (ERC20) stablecoins saw an influx of $311.5 million. This supports the theory that when liquidity rises, investors double down, bolstering their portfolios.
Bitcoin vs. Stablecoins
Mathematically, a 56.5% surge like the 'Trump Pump' could push Bitcoin past $140k by Q1, with $90k acting as a strong support level. Interestingly, the past three days have seen stablecoin net flows turn positive.
Despite positive indicators, the market remains volatile. Attention to stablecoin supply and its dynamics remains a key factor for investors watching Bitcoin's price change.
