Does the growing Tether supply herald a new crypto bull market?

According to analysts from the New York Digital Investment Group (NYDIG), Tether’s USDT stablecoin is exhibiting similar behavior to 2019 and 2020, the years just before the previous bull market.

The USDT supply is up nearly 4% since last November, marking its highest point since the fall of FTX. We also saw such an increase in the aforementioned years. Does this development of Tether herald the start of a new bull market for crypto?

Tether supply is rising

According to NYDIG, the growth in Tether supply is a good and healthy sign for the crypto industry as a whole. On a historical basis, it can be concluded that it demonstrates a new flow of capital to the crypto sector.

In 2019, we saw such growth in the Tether supply go hand in hand with a strong price increase in bitcoin (BTC). Then the price of bitcoin rose from $ 3,250 to $ 13 thousand, before cooling off slightly in the second half of the year.

In the second half of 2020, just before the bull market, USDT supply doubled. This was accompanied by a 130% price increase for bitcoin. In general, a correlation is therefore observed between the increase in the Tether supply and the price of bitcoin.

Does history repeat itself?

Perhaps it is a coincidence, but the two phenomena seem to be strongly correlated. However, according to William Fong of the Australian trading company Zerocap, it can also mean something else.

“We have recently seen a growing interest in digital assets and also in the use of stablecoins. However, we cannot determine whether that interest is related to Tether’s supply growth or whether it is simply risk management related to the current macroeconomic situation.”

It is therefore difficult to determine whether the growing supply of Tether facilitates the price increases in the crypto market. What is clear is that it is a healthy and highly desirable development for the bulls. The growth of the Tether supply ushered in the bull market a few years ago, and the future will tell if history repeats itself.

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