Over the past weeks, the cryptocurrency market has remained relatively calm. This has raised concerns about whether or not Bitcoin and altcoins will see a decline.
However, market observers, citing stablecoin inflows and other reasons, stressed that the probability of an upward cycle remains high.
The stablecoin market is expanding
Blockchain analytics firm IntoTheBlock reported that the market cap of stablecoins is recovering strongly. Various assets in the industry, including USDT and USDC, have added more than $9 billion since October 2023. The market cap of stablecoins now stands at $133 billion.
This increase reflects the renewed strength in the stablecoin sector and confirms a significant liquidity injection into the cryptocurrency industry. Additionally, the rise is a promising indicator of growing investor confidence in the potential start of a market uptrend.
“The market cap of stablecoins is recovering strongly, adding more than $9 billion since October 2023. The continued upward trend reinforces the possibility of an upcoming bull market cycle,” IntoTheBlock said.
Cryptocurrency analyst Zyre offered a more nuanced explanation. According to the analyst, stablecoins are the “bridge” between traditional finance and the cryptocurrency industry. Therefore, the significant rise in market capitalization shows that “the bridge is expanding to accommodate more cryptocurrency enthusiasts.”
Interestingly, Tether's USDT leads the stablecoin sector with a market capitalization of $96 billion. However, JPMorgan analysts expressed concerns about USDT's dominance, highlighting the significant risks facing the industry. Instead, they are defending USDC because of Circle's regulatory compliance.
Stimulants for further growth
Along with the rising market capitalization of stablecoins, industry experts believe that cryptocurrencies will rise due to the impending Bitcoin halving and the recent approval of Bitcoin ETFs.
A recent study revealed growing optimism regarding the impact of the halving on the price of Bitcoin. Nearly 84% of investors believe that this will help push Bitcoin to higher levels.
Bitget revealed, “More than half of participants expect Bitcoin prices during the halving period (around April 2024) to range between $30,000 and $60,000, while 30% believe that the price will exceed $60,000.”
Likewise, the newly launched Bitcoin ETFs are paving the way for potential upward momentum in the cryptocurrency market. Observers point to the early success of these ETFs as an indicator of the significant impact they can have on the overall market.
“Spot Bitcoin ETFs have had nearly $700 million in net inflows this week alone. Absolutely amazing. People have overestimated the short-term impact of ETFs, and they continue to… significantly reduce its long-term impact.
Disclaimer
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