Bitcoin (BTC) Price Continues Upward Momentum, But Stablecoin Liquidity Is Key to Future Gains

Bitcoin's price has continued its upward momentum over the past week, surging by an impressive 16.25% to briefly surpass the $67,000 mark.

Bitcoin (BTC) continued its upward price momentum over the past week, surging by an impressive 16.25% to briefly cross the $67,000 mark. This uptick in price brings hope to investors who are eagerly awaiting a more sustained bull run following the upcoming halving event in April. However, future gains for Bitcoin are believed to be influenced by various factors, especially the liquidity in the stablecoin market.

On Friday, on-chain analytics platform CryptoQuant highlighted the critical role of stablecoin liquidity in Bitcoin’s price appreciation. According to CryptoQuant, for Bitcoin to continue seeing price increases, there must be a corresponding rise in stablecoin market shares.

As a type of cryptocurrency that is usually pegged to a reserve asset, such as the US dollar, stablecoins had a combined value of $163.56 billion. These assets are essential for digital asset adoption among users who are wary of market volatility. CryptoQuant pointed to Tether (USDT), the largest stablecoin with a market cap of $113.78 billion, as a significant influencing factor on Bitcoin’s price.

CryptoQuant’s analysis showed that USDT's growth over the past month has been a mere 1.03%, which has corresponded with a slight 3.21% increase in Bitcoin's price during the same period. This is in stark contrast to USDT's 6.6% market share growth in March 2024, coinciding with Bitcoin's rise from $61,168 to a new all-time high of $73,750.

The interconnection between USDT and Bitcoin is likely due to the extensive use of USDT in crypto trading. Increased USDT liquidity could empower traders to heighten demand for high-risk assets like Bitcoin. Therefore, CryptoQuant argues that for Bitcoin to sustain its current positive price trajectory, there must be a significant increase in stablecoin liquidity.

Amidst Bitcoin’s price rally, well-known crypto analyst Ali Martinez has issued a cautionary note. According to Martinez, Bitcoin must hold above the $66,385 level to prevent a massive liquidation event that could result in losses of approximately $42.67 million. As of the latest update, Bitcoin is trading at $66,571, marking a 4.65% gain in the last 24 hours. The asset’s daily trading volume has also made a considerable jump of 38.08%, reaching $37.2 billion.

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