Bitcoin’s price cap and its surge in market cap call for a celebration, but what most people missed is the surge in stablecoins. Recently, Bitcoin hit a new high that hasn’t been seen in the past two years, and it is only for a price; the all-time high is only 9% away now. While this is underway, bitcoin’s market cap might strike a new ATH.
Yet we have partly forgotten about the stablecoins, especially Tether, which hit $18B in market cap, which is staggering in and of itself. Because the most traded stablecoin has more trading volume than Bitcoin. Merely speaking, Tether is the Bitcoin of Stablecoins.
Why does it matter?
Most of Bitcoin’s trading volume came from trading it against the base pair USDT and not USD or some stablecoins. Therefore, a swell in Tether’s circulation or market cap helps meet the demand needed during a FOMO.
The mining industry is also an important industry that is relying on USDT. The miners need to cash out their profits, which needs to be in USDT. Bitcoin surge is good, but Tether’s surge makes Bitcoin’s surge possible by providing liquidity for users to convert from fiat to stablecoins and then into Bitcoin.
The most important reason that this matter is the expansion that happened with Bitcoin and USDT correlation.
The correlation of Bitcoin with USDT spiked after the drop in March, but after reaching a local peak of .95, it dropped and continued plummeting. Last August, the correlation of BTCUSDT has started falling massively. As of now, this correlation stands at 0.13, the lowest in the past five months.
It is proving that this pump in Bitcoin’s price isn’t driven by Tether but by the organic demand for Bitcoin.
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