Tether (USDT) Supply Surge Injects Fresh Capital Into Bitcoin Markets, Aligning With Past Recovery Trends

Bitcoin's price momentum is improving as stablecoin liquidity surges, with Tether's (USDT) market cap expanding by $5.75 billion

A massive surge in Tether’s (USDT) stablecoin supply has injected fresh capital into crypto markets, aligning with past Bitcoin (BTC) recovery trends, data from CryptoQuant reveals.

Tether stablecoin market cap expands rapidly, impacting Bitcoin price

Over the past 60 days, Tether’s stablecoin market cap has expanded by $5.75 billion, outpacing its 60-day Simple Moving Average (SMA) of $3.46 billion. This trend, which is "historically linked to higher Bitcoin prices," was highlighted by CryptoQuant in a March 13 post on X.

📊 Tether’s (USDT) stablecoin market cap has expanded rapidly, impacting #Bitcoin prices.

According to a recent post by community manager Crypto Dan, such trends are “historically linked to higher Bitcoin prices.”

Read more, in cooperation with BestEffort: https://t.co/5b530KzM8v pic.twitter.com/a97yzYf2j6

— CryptoQuant (@CryptoQuant_) March 13, 2024

Furthermore, on-chain data firm Santiment has also reported a surge in Tether’s on-chain activity. On March 11, over 143,000 wallets made transfers, marking a six-month high, as reported by the firm in an X post.

The post suggests that "when USDT & other stablecoin activity spikes during price drops, traders prepare to buy." This added buying pressure can help crypto prices recover.

💸 Tether's on-chain activity has been rapidly rising, with over 143K wallets making transfers yesterday alone (a 6-month high).

When $USDT & other stablecoin activity spikes during price drops, traders are preparing to buy. This added buy pressure aids in crypto prices recovering.

— Santiment (@santimentlabs) March 12, 2024

Bitcoin faces selling pressure from large holders

However, Bitcoin faces selling pressure from large holders. According to Santiment data, wallets holding between 100 and 1,000 BTC offloaded over 50,600 BTC—roughly $4.07 billion—in the past week.

📉 Bitcoin's key stakeholders are showing signs of dumping:

🐳 Wallets with 100-1,000 #BTC: -50,625 Bitcoin (-$4.07B) in the past week

🦈 Wallets with 10-100 $BTC: -7,062 Bitcoin (-$567.1M) in the past week

Over the long-term, markets tend to fluctuate with a mid-sized… pic.twitter.com/jSioi9mzuS

— Santiment (@santimentlabs) March 10, 2024

This sell-side pressure is significant, especially considering that such large-scale sell-offs have typically contributed to short-term volatility in Bitcoin’s price.

At the same time, the total Bitcoin holdings by wallets with 10 to 100 BTC have also decreased by 7,062 BTC, amounting to approximately $567.1 million, over the past seven days.

As Bitcoin approaches the oversold zone, analysts are divided on whether this signals the start of a sustained rally or further downward pressure on the world’s leading cryptocurrency.

According to the analysis of the CryptoQuant’s community manager Crypto Dan, Bitcoin’s Market Value to Realized Value (MVRV) ratio has dropped to 1.8, approaching its 2024 low of 1.71. This level has historically signaled buying opportunities.

At the same time, short-term Bitcoin holdings surged to 23% in March, mirroring a pattern seen in December 2024 before a market correction.

While Bitcoin could still dip into the $70,000 range, Dan noted that extensive deleveraging may reduce the need for further declines.

“The market is in the final phase of the upward cycle, experiencing a strong correction, which increases both risk and investment difficulty,” he said.

“However, as the market enters an oversold state, the probability of a rebound also increases.”

Despite these indicators, uncertainty remains. While stablecoin growth typically supports Bitcoin rebounds, short-term sentiment remains fragile.

Whale activity, macroeconomic trends, and the strength of any potential recovery will play a crucial role in determining Bitcoin’s next move.