Stablecoin Issuance Could Fuel Bitcoin’s Next Surge, Says Market Researcher

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Crypto experts are saying that an influx of stablecoin issuance might be the catalyst for Bitcoin’s next significant price surge. Markus Thielen, head researcher at 10x Research, has pointed to recent movements in stablecoin issuance as a strong indicator of potential upward momentum in the market.

Last week, nearly $2.8 billion in new stablecoins were issued by two of the largest providers, Tether and Circle. According to Thielen, this substantial issuance signals that institutional investors might be channeling fresh capital into the crypto space. Thielen remarked, “If this trend of issuance—not just minting—continues, Bitcoin could see further gains.”

Stablecoin Issuance: A Key Driver for Bitcoin

Stablecoins, like Tether’s USDT and Circle’s USDC, play a pivotal role in the cryptocurrency ecosystem by providing liquidity and stability, particularly during volatile market conditions. These digital assets, which are pegged to a fiat currency like the U.S. dollar, allow traders and investors to move in and out of crypto positions without the need to convert back to fiat currencies.

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Bitcoin has been trading within a relatively tight range of $58,000 to $62,000 since August 9, following a bounce from a brief dip to $55,000. However, breaking through the critical $60,000 to $61,000 resistance zone has proven challenging.

Thielen suggests that while factors like a lower Consumer Price Index (CPI) could influence the market, they alone are unlikely to propel Bitcoin beyond this barrier. “A lower CPI won’t be enough on its own,” he noted, emphasizing the need for sustained stablecoin inflows to drive a meaningful rally.

The Role of Stablecoins in Bitcoin’s Rally

For Bitcoin to maintain its upward momentum, Thielen believes that “real money buying through stablecoins” is essential. He explained that stablecoin inflows have been a significant factor in Bitcoin’s rallies this year, more so than other macroeconomic indicators. He writes:

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“A strong stablecoin inflow is essential to make the breakout sustainable, especially since other factors have had less impact on Bitcoin’s rally this year.”

Recent data supports this view. On August 13, Tether minted $1 billion in USDT, though this was primarily for inventory purposes rather than immediate market issuance, as clarified by Tether’s CEO, Paulo Ardoino. Despite this, Tether’s market capitalization has grown by around $1 billion over the past week, reaching a record $115.6 billion, according to their transparency report.

Meanwhile, Circle has seen its market capitalization increase by 4.5% since the start of August, with $34.5 billion USDC now in circulation. Thielen suggests that these inflows are likely driven by U.S. institutions seizing the opportunity presented by the recent market dip.

Legislative Moves

The broader regulatory environment is also shaping the landscape for stablecoins and, by extension, the broader crypto market. In April, U.S. Senators Kirsten Gillibrand and Cynthia Lummis introduced a legislative proposal aimed at creating a comprehensive regulatory framework for stablecoin issuers and fiat-backed digital assets.

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