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An analysis company has explained how the data with regard to the stablecoins can indicate whether the Bitcoin market top is in or not.
Stablecoins have recently seen their market capital that touch new highlights
In a new one after On X, the Market Intelligence Platform Intotheblock discussed the trend in the combined Stablecoin market capitalization. “Stablecoins” refer to cryptocurrencies that are linked to a Fiat -where USD is the most popular choice).
In general, investors use these assets when they want to avoid the volatility related to other coins such as Bitcoin. However, traders who invest in stablecoins usually do this because they are planning to venture (back) in the volatile side of the sector.
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As such, the delivery of these Fiat-Bondon tokens is often considered the available ‘dry powder’ for Bitcoin and other cryptocurrencies. Given this placement of the stables in the sector, their market capitalization can be worthwhile to keep an eye on.
Here is the graph that is shared by the analysis company that shows the trend in the Stablecoin market capitalization in recent years:
As shown in the graph above, the market capitalization of the Stablecoins recently driven on an upward trend and explored new of all time (ATHS). After the last continuation to the increase, the metric hit no less than $ 219 billion.
To put things in perspective, the market capitalization of Ethereum (ETH), the second largest active in the sector, is slightly less than $ 233 billion. The stables are therefore less than $ 14 billion removed.
Intotheblock has pointed to an interesting pattern with regard to this indicator. It is visible in the graph that the last cycle of the metric was when it reached $ 187 billion in April 2022. Apparently this peak fell into the market capitalization of the stables together with the start of the Berenmarkt.
“Historically, the peaks of Stablecoin Supply correspond to cycle heights,” notes the analysis company. Until now, the indicator in the current cycle has continued to rise, despite the fall in the price of the active. If the previous trend is something to enter into, this may be an indication that Bitcoin and other coins still have to enter a bear market.
That said, the last market conditions have not been exactly completely bullish. The most positive scenario occurs when both BTC and the Stablecoins enjoy an increase in their market hoods. In such a period, a net amount of fresh capital inflow arrives in the sector.
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At the moment, however, the Stablecoins have risen while Bitcoin and others have fallen. This may be a rotation of capital, instead of new inflow.
During the correction of the middle of the 2021 a similar pattern arose, but the market could find its foot and the second half of the rally took place. It is still too considered whether something similar this time would also happen for Bitcoin, or whether the market will go as it did in 2022.
Bitcoin -price
At the time of writing, Bitcoin acts around $ 84,700, a decrease of more than 4% in the last seven days.
Featured image of Dall-e, Intothlock.com, Graph of TradingView.com
