The Bitcoin market is showing signs of a potential rebound, fueled by a surge in stablecoin liquidity, particularly Tether (USDT). Over the past 60 days, USDT’s market capitalization has grown by $5.75 billion, while the overall stablecoin market has expanded by 11%.
Historically, an increase in stablecoin liquidity has often preceded Bitcoin uptrends. However, the current market volatility remains a key factor that could disrupt this pattern.
More USDT Activity & Signs of Market Growth
On-chain data indicates a remarkable spike in Tether (USDT) transactions. On March 11, blockchain analytics firm Santiment recorded over 143,000 active wallets transacting in USDT—the highest level in the last six months.
According to Santiment, similar increases in stablecoin activity during market downturns have historically signaled a trend reversal. This could suggest that traders are positioning for an upcoming bullish move in the crypto market.
Despite the rising stablecoin liquidity, Bitcoin remains highly volatile. After hitting an all-time high of $109,000 in January, BTC has since lost nearly 30% of its value, currently trading around $84,000.
Bitcoin Approaching Oversold Levels?
A March 12 report from CryptoQuant suggests that Bitcoin may be entering an oversold zone—historically a strong buy signal.
MVRV (Market Value to Realized Value) ratio, a crucial indicator used to evaluate Bitcoin’s price relative to its historical valuation, has now dropped to 1.8. This figure is approaching the correction low of 1.71 recorded earlier in 2024, signaling that Bitcoin may be nearing a key support level.
As MVRV nears historical correction zones, investors are closely watching for potential buying opportunities or further downside risk, depending on overall market sentiment and macroeconomic conditions.
However, uncertainty lingers. Large Bitcoin holders (wallets holding 100-1,000 BTC) have offloaded more than 50,600 BTC over the past week, worth approximately $4.07 billion. This could add further downward pressure on the price.
A Silver Lining: Network Growth Remains Strong
Despite the sell-offs, Bitcoin’s holder base remains near an all-time high of 54.72 million users. This suggests that while whales are cashing out, the Bitcoin network itself is still expanding.
The next few weeks will be crucial for Bitcoin. Indicators suggest that a bottom may be forming, but that doesn’t mean a further dip is out of the question. Traders should stay cautious, as the ongoing market turbulence could lead to unexpected price swings.
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