Tether's Supply Growth Slows Down Amid Falling Crypto Market Liquidity
Summary:
June witnessed a significant decrease in the growth of Tether (USDT) stablecoin supply, highlighting a reduction in cryptocurrency market liquidity. Due to factors like decreased trading volume and substantial daily outflows, Bitcoin experienced a decline of over 10% in its price over the last month. The broader economic landscape, with recession risks in the U.S. and reduced global growth rate expectations, continues to put pressure on the crypto markets, which could pose significant challenges to Bitcoin's price.
The month of June recorded a steep decrease in the expansion of the Tether (USDT) stablecoin supply, signifying the falling liquidity in the cryptocurrency marketplace. As per a report by digital asset custodian Copper, there's been a meager growth of less than 1.5% in the stablecoin's supply running month-on-month until June 24, in contrast to the growth of over 5% in April and May. As Fadi Aboualfa, Head of Research at Copper, states, this suggests the reduced liquidity being directed towards cryptocurrency markets, with Bitcoin, Ethereum experiencing a downward push and no hope for significant fluctuation in altcoins in the imminent future.
USDT witnessed a significant dip in trading volume from its highest value ever on March 11, when it reached a peak trade activity of $767.22 billion, to $53.55 billion on June 24. As a currency with a market valuation of $113 billion, slower growth in USDT supply implies less capital inflow into the crypto markets.
The Bitcoin market has been facing significant outflows daily, with a report by Copper showing that more than $540 million has exited the market in the previous week. In the past one month, there's been a decline of more than 10% in Bitcoin (BTC) price, going from approximately $68,000 to close to $62,000 at press time. According to Aboualfa, the uniform flow of Bitcoin's price is in sync with the focus on ETF dynamics. This uniform path doesn't hint towards bullish demand. Rather, it reflects the likely reluctance of investors to sell their Bitcoin at a diminished value, anticipating a crash.
From the time Exchange-Traded Funds (ETFs) began its trade in January, Bitcoin's price witnessed an increase of 37%. "Given the acceptable low and high trading range relative to possessions, Bitcoin's price might continue to undergo downward pressure," Aboualfa comments.
The larger economic landscape is contributing to the pressure on crypto markets. A June 25 report by ETC Group signals that the traditional markets have begun to factor in the decreasing global growth expectations. The report argues that the consistent underperformance of the U.S. economic data compared to projections is a major cause for the downward revision of global growth anticipation. The Bloomberg US ECO Surprise Index, which measures the gap between the actual macroeconomic data and predicted figures, has reached the lowest point since 2019. This decline points to a wider acknowledgment of the deteriorating macroeconomic scenarios. Rising recession risks in the U.S., along with continual reduction in global growth anticipations, are expected to pose challenges to the Bitcoin price, according to ETC Group. As seen in Magazine: Ethereum’s recent drawdown could pave the way for Dynamo DeFi, X Hall of Flame.
Published At
6/25/2024 10:06:24 PM
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