Bitcoin price drops below $59K as institutions stop buying stablecoins

Bitcoin price saw its local bottom last time Tether minted $1.3 billion worth of stablecoins, which helped BTC recover over 21%.

Institutional investors have halted their accumulation of stablecoins over the past two days, leading to a drop in Bitcoin’s price below a key psychological level.

During the past 24 hours, Bitcoin (BTC) price fell 3.9% to trade at $58,930 as of 08:03 a.m. in UTC, falling from a weekly high of $62,510.

The drop below the $60,000 mark was likely caused by institutions stopping their stablecoin buying frenzy, according to onchain analytics platform Lookonchain’s Aug. 12 X post:

“Institutions seem to have temporarily stopped buying, and the price of $BTC dropped 4.5% today! We noticed that institutions stopped receiving $USDT from #TetherTreasury and transferring it to exchanges 2 days ago.”

The lack of institutional stablecoin inflows to crypto exchanges can signal a lack of buying pressure and investor appetite for the underlying asset, as stablecoins are the main on-ramp from the fiat to the crypto world used by investors.

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Tether’s previously minted $1.3 billion marked the local bottom

Tether, the issuer of USDT (USDT) — the world’s largest stablecoin — has minted over $1.3 billion worth of stablecoins from the market bottom on Aug. 5 until Aug. 9.

The $1.3 billion was transferred to some of the most popular centralized cryptocurrency exchanges, including Kraken, Coinbase, OKX and Bullish.

Bitcoin price bottomed at a five-month low of above $49,500 on Aug. 5 and staged an over 21% recovery to above $60,000 by Aug. 9.

Bitcoin price could stage a recovery above the $60,000 psychological resistance once large institutional stablecoin inflows resume.

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Bitcoin needs to reclaim $60,000 for more upward momentum: analyst

In terms of technical analysis, Bitcoin price needs to reclaim $60,600 for the next leg up, according to popular analyst Rekt Capital, who wrote in an Aug. 10 X post:

“Bitcoin is doing all the right things to confirm $60,600 as support so as to position price for a revisit of $65,000+ over time.”

However, inflows from the US spot Bitcoin exchange-traded funds (ETFs) remain low. The US Bitcoin ETFs saw over $89 million worth of net negative outflows on Aug. 9, according to Farside Investors data.

ETF inflows can significantly contribute to a cryptocurrency’s price appreciation. For Bitcoin, ETFs accounted for about 75% of new investment in the cryptocurrency by Feb. 15 as it surpassed the $50,000 mark.