Current price of bitcoin: $61,000
On Wednesday, the price of bitcoin showed indications of weakness by closing below the $62,000 support level.
A recent study by CryptoQuant demonstrates how an increase in the market cap of stablecoins may bode well for Bitcoin and similar cryptocurrencies.
On Wednesday, it was the second day in a row that US Spot Bitcoin ETFs saw outflows.
After Wednesday's close below the critical support level of $62,000, the price of Bitcoin (BTC) stabilises at $61,000 on Thursday. With two days of consecutive withdrawals in US Spot Bitcoin Exchange Traded Funds (ETFs), this might signal a change in market mood in the near future as institutional demand declines. A possible indication of underlying optimistic mood and potential recovery prospects might be the expanding stablecoin market capitalization.
Once the market cap for stablecoins hits a new high, the price of bitcoin can skyrocket.
The increasing market capitalization of stablecoins, according to a research published on Tuesday by CryptoQuant, might bode well for Bitcoin and other cryptocurrencies.
According to the research, stablecoin value, an indicator of market liquidity, hit an all-time high at the end of September. Below is a graph showing that the entire market capitalization of major US Dollar-backed stablecoins has increased to $169 billion, a 31% year-to-date (YTD) gain of $40 billion. Since stablecoins provide liquidity to the market, a rise in their market capitalization is often correlated with an increase in the price of Bitcoin and other cryptocurrencies.
The research goes on to say that bigger stablecoin balances on exchanges are associated with better pricing for Bitcoin and other cryptocurrencies. With the beginning of the current bull cycle in January 2023, the total amount of USDT (ERC20) traded on exchanges increased from $9.2 billion to $22.7 billion, a growth of 146%. The notable thing is that these amounts have increased by 20% while the price of Bitcoin has stayed the same.
There has been a monthly growth in the market capitalization of USDT and USDC, however it has been slower than earlier in the year. Monthly growth in USDC market capitalization has slowed to 2.1% from a high of 14.4% in March 2024. Moreover, compared to its all-time high of 6.6% in March, the USDT market cap is up 1.3% month-on-month (MoM). The new upward trend in Bitcoin and cryptocurrency prices might be signaled if the market capitalization of these stablecoins continues to expand at a faster rate than Bitcoin itself.
But in the near run, institutional demand is still not looking good. Data from Coniglass shows that on Wednesday, $30.60 million left the US Bitcoin Spot ETF. You can learn a lot about the attitude of institutional investors towards Bitcoin by looking at the ETF flow statistics. A decrease in Bitcoin's price might be in the horizon if the current trend of large-scale outflows persists.
Prediction for Bitcoin Price: BTC closes at $62,000
Wednesday saw a 2.45% loss in Bitcoin value as its price breached and closed below the $62,125 support level. Bitcoin is now trading close to $61,000 and is finding support around $60,024, which is its 200-day Exponential Moving Average (EMA).
If the price of bitcoin falls below $60,024, it may fall more than 4% and retest the $57,493 low it hit on September 16.
Below the neutral level of 50, the Relative Strength Index (RSI) on the daily chart indicates poor momentum, which might lead to more price drops for Bitcoin.
A break and closing over $62,125 for BTC would, however, render the bearish thesis null and void. The Bitcoin price may rise and retest the psychologically significant $66,000 mark if this happens.
