Is Bitcoin (BTC) price poised to rally again as liquidity builds?

The first month after Bitcoin’s halving last month has been quiet. However, this could soon change as CryptoQuant observed a serious increase in the volume of stablecoins entering the market.

Interestingly, there are significant jumps in stablecoin inflows at various points, which often correspond with bitcoin price movements.

Increased liquidity indicates a strong bullish trend

Bitcoin witnessed a significant increase in value following the historic approval of US Exchange Traded Funds (ETFs) this year. However, it has been struggling to gain momentum since falling below its 2021 all-time high of $69,044 in early April. The initial hype about ETFs has died down, slowing the cryptocurrency’s once unstoppable rise.

However, there are signs of improvement due to increased liquidity in the market, as seen with the recent notable increase in stablecoin inflows.

Such an influx can affect the dynamics of bitcoin supply and demand, which can lead to greater price volatility, according to the findings of the on-chain intelligence platform.

“The price of bitcoin has shown multiple fluctuations over time, while the blue area indicates the amount of stablecoins entering the market. In particular, there are significant increases in stablecoin inflows at various points, which often match Bitcoin’s price movements.”

Stablecoin inputs. Source: CryptoQuant

Bitcoin saw its biggest one-day gain in nearly two months this week amid mixed US economic data, raising the likelihood that the Federal Reserve will join other countries in easing monetary policy through cuts of sorts during the summer. As a result, the world’s leading cryptocurrency surged nearly 8% to $66,400, marking its biggest gain since March 20.

Is Bitcoin Back To New ATH?

Prominent crypto trading firm QCP Capital noted that the change in bullish momentum could push BTC to retest its previous highs of around $74,000.

It also saw a significant increase in call buyers of 100-120k BTC for December 2024, indicating growing confidence in the value of the asset. Meanwhile, institutional demand for the cryptocurrency remains strong, with major asset managers such as Millenium and Schonfeld allocating roughly 3% and 2% of their assets under management (AUM) to the Bitcoin ETF at the moment.

These factors paint a bullish picture of a potential BTC breakout.

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