- The crypto market has had a rocky start to Q2 2024.
- The tumultuous start has led to market participants sidelining.
- USDT held by exchanges reached a new high following the recent market turbulence.
Earlier this year, the crypto market was teetering on the edge of a historic bull run, thanks to the momentum from the hype surrounding the Bitcoin ETF approval. The investment vehicle’s success in the first quarter sparked a ripple effect, driving gains of over 100% across several tokens.
However, as Q1 drew close, the market sentiment shifted, clouded by doubts, fears, and uncertainties. Factors such as escalating geopolitical tensions, the halving event, and rumors of impending lawsuits from the SEC triggered a sustained sell-off among investors, prompting a notable shift in market sentiment and capital, notably towards USDT.
Increase in USDT Supply Implies Traders are on the Lookout
The crypto market continues to struggle to regain stability in Q2 2024 after a tumultuous end to the first quarter. Worsened by various ongoing challenges, such as the war in the Middle East and the SECโs attacks on the industry, Bitcoin and the broader crypto market are bearing the brunt of widespread liquidations.
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According to many participants, the market has been rendered sterile for any bets with the ongoing crises.
However, amidst this uncertainty, with more market participants sidelining in hopes of returning when things are calmer, there appears to be a significant changeโ a massive surge in USDT supply.
Exchanges are holding more of Tetherโs USDT, with the 7-day moving average of the change in USDT reserves reaching half a billion dollars earlier this monthโ the highest it has been in a year.
The increase in the USDT supply held by the exchange suggests that traders are cautiously assessing market conditions, weighing whether the storm has passed or if further turbulence lies ahead. The lack of USDT withdrawals from exchanges implies market participants seek opportunities.
Still, despite the ongoing challenges, there are signs of improvement. Bitcoin is showing renewed strength, trading above $65,000 and showcasing increased activity compared to recent weeks. At the time of writing, BTC exchanged hands at $64,000, with a daily trading volume of $25 billion.
On the Flipside
- In addition to the surge in USDT held by exchanges, Bitcoin accumulation has been climbing slowly, growing by over 6,000 BTC or over $380 million daily.
- Last week, the market saw over $800 million in liquidations.
- Dailycoinโs bitcoin expert Kyle Calvert opines that a break below the $59,000 support level could trigger a downward spiral, potentially pushing the price to $51,000.
Why This Matters
Bullish market sentiments have received a massive dent following the ongoing challenges in the world. However, the increase in stable supply suggests that investors are excited and ready to deploy their capital once the market drops down to its ideal levels.
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