BTC Rally Limited by Scarce Stablecoin Liquidity, Analysis Shows

IconCryptoNewsTerminal Staff17 Jul, 2024

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BTC Rally Limited by Scarce Stablecoin Liquidity, Analysis Shows

The recent surge in Bitcoin (BTC) prices may be capped due to a lack of stablecoin liquidity, according to analysts at CryptoQuant. Despite inflows into BTC spot exchange-traded funds (ETFs), the analysts noted that the monthly issuance of Tether (USDT), a leading stablecoin, has remained flat. This, they argue, is holding back the BTC rally. The analysts believe that this dynamic is likely to continue until there is ample stablecoin liquidity available. The limited stablecoin liquidity can be attributed to several factors, including regulatory concerns and the recent collapse of the Terra ecosystem. As a result, traders may be hesitant to convert their fiat currencies into stablecoins, which are typically used to facilitate cryptocurrency purchases. This analysis highlights the importance of stablecoins in the cryptocurrency market. Stablecoins provide liquidity and stability, making them essential for the growth and adoption of cryptocurrencies. However, the lack of stablecoin liquidity can limit the upside potential of BTC and other cryptocurrencies.

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