Key Points
- USDT supply increased by 0.37% as Bitcoin experienced a 2% decline.
- Stablecoins have surged during market consolidation, with USDT and USDC market cap increasing by $1.153 billion.
The recent market consolidation has seen a surge in stablecoins. From the 9th of September, the market cap of USDT and USDC increased by a whopping $1.153 billion, with USDT up $410M and USDC up $743M.
This influx of capital coincided with Bitcoin’s rise to $60.5K, marking a 12.04% gain in just one week.
USDT Supply Increases
On the 16th of September, while Bitcoin experienced a 2% decline from the previous day, the circulating supply of USDT jumped from $54.14B to $54.34B. This increase in liquidity could potentially support Bitcoin price increases in the coming days, provided there is less reliance on USDT as a safe haven.
However, the chart presents a sharp contrast to this expectation. The tremors have led to panicked stakeholders, as shown by consecutive negative flows. Investors may have shifted capital into USDT for safety while Bitcoin’s price fell, reflecting a liquidity shift rather than a direct correlation.
Stablecoin Outflows and Market Capitulation
The chart shows that many Bitcoin holders are currently in profit, which is a bullish sign. However, this could signal a market top as high NUPL could lead to profit-taking and potential corrections. On the other hand, rising USDT outflows could turn NUPL negative, indicating unrealized losses and possible selling to break even.
The exact position will become clearer after the FOMC meeting. If bulls act decisively, profit holders might maintain their gains. However, nearing the $55K range could trigger increased USDT outflows, signaling potential capitulation.
For context, on the 3rd of September, a massive $230M USDT flowed out of exchanges on the same day Bitcoin dropped nearly 3%, following a 4% rise the previous day. This indicated that investors were likely shifting capital to safety, causing BTC to plunge below $54K in just three days. If this trend holds, BTC could retrace back to the same support level again this time.
