Bitcoin Price Jumps on Monday, Spurring Market Analysis coincides with Tether’s minting activity, By Wednesday moring, the coin has bounced off the $42,800 support after a brief consolidation on Tuesday.
The Latest Tether USDT Issuance
Bitcoin soared to near $43,500 on January 29th, igniting a flurry of explanations and debates within the crypto community. Several potential catalysts were thrown into the ring, each vying to explain the sudden surge.
One frequently mentioned factor is the recent minting activity of Tether, a controversial stablecoin pegged to the US dollar. Tether issued over $1 billion in new USDT tokens in the days leading up to the Bitcoin price surge, leading some to speculate that this injection of liquidity may have influenced the market.
— Whale Alert (@whale_alert) January 29, 2024
Bitcoin Rallies Onward, But Caution Urged
It’s crucial to remember that while data might suggest connections, the true cause of Tether’s actions and their long-term impact remain debatable. Nonetheless, some on-chain data shows encouraging signs. For instance, Santiment suggests the current upward trend, starting in October, might have legs. This is especially interesting considering the fast-approaching Bitcoin halving on April 18th.
Investment Shifts Fuel the Fire
Another key factor behind Monday’s rally is a noticeable shift in investment trends. Notably, inflows into spot Bitcoin ETFs surpassed outflows from GBTC, a major source of selling pressure last week.
Fidelity’s FBTC led the charge, attracting a whopping $208 million in daily inflows on January 29th, exceeding GBTC outflows for the first time ever. Additionally, GBTC outflows dropped by nearly 25% since January 26th, suggesting a potential shift in investor sentiment. This aligns with the success of new U.S. spot Bitcoin ETFs, which together amassed a volume of $994.1 million on January 29th, almost double that of GBTC’s $570 million.