Stablecoin issuance could be key to the next Bitcoin rally: 10x Research

More than $2.5 billion has been issued by Tether and Circle over the past week, and 10x Research believes continued momentum could spark a Bitcoin rally.

An increase in stablecoin issuance could be the key to the next Bitcoin surge, according to 10x market researcher Markus Thielen. 

Nearly $2.8 billion was issued by stablecoin providers Tether and Circle earlier last week, indicating that “some institutional investors are injecting fresh capital into the crypto market,” stated the head researcher at 10x Research on Aug. 14.

He added that if stablecoin issuance continues, it could result in upward momentum for BTC prices.

“If this trend of issuance (not just minting) continues, Bitcoin could see further gains.”

Bitcoin has been hovering between $58,000 and $62,000 since Aug. 9 when it climbed from a dip down to $55,000.

However, for Bitcoin to break above the $60,000 to $61,000 resistance zone, a lower CPI (Consumer Price Index) won’t be enough on its own, he noted.

July’s CPI report, a primary measure of inflationary pressures in the United States, is due on Aug. 14.

A sustained rally would likely require “real money buying through stablecoins,” he said.

“A strong stablecoin inflow is essential to make the breakout sustainable, especially since other factors have had less impact on Bitcoin’s rally this year.”

The researcher noted that Bitcoin’s price action “looks promising” if it can remain above $60,000, “but without stronger stablecoin inflows, this rally could lose momentum.”

On Aug. 13, Tether minted $1 billion in USDT. However, this was for inventory building rather than immediate issuance, as noted by CEO Paulo Ardoino.

Tether’s market capitalization has increased by around a billion dollars over the past week, propelling it to a record $115.6 billion, according to the Tether transparency report.

Meanwhile, Circle’s market capitalization has increased by 4.5% since the beginning of August, and it now has $34.5 billion in USDC circulation.

“Given Circle’s ties to more regulated counterparties than Tether, these flows likely originated from U.S. institutions capitalizing on the dip,” noted Thielen.

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

Without other factors such as a changing macro environment, a more accommodative Federal Reserve, or presidential candidate Donald Trump regaining momentum in the polls, “Bitcoin will likely remain sluggish short-term trading,” he concluded.

BTC prices have gained 3.2% on the day topping $61,000 during early trading on Aug. 14.