Bitcoin – How FOMO and $2B USDT could drive BTC’s next leg

Key Takeaways

Tether has minted $1B USDT as Bitcoin’s Fear & Greed Index drops into ‘fear.’ Is this a strategic move hinting that BTC may not have bottomed yet?

Tether [USDT] has kicked off a serious minting run.

In less than a week, the company rolled out two $1 billion tranches. That’s $2 billion in fresh USDT supply hitting the market. The first batch hit on the 15th of August, right as Bitcoin [BTC] tagged a new ATH at $124k.

Meanwhile, the second mint followed on the 20th of August, aligning with BTC’s retrace to $112k. Is there a signal in the timing, maybe a hint the market isn’t done cooling off yet?

Tether injects $2B as Bitcoin enters fear zone

Two billion USDT hitting supply in under a week is unlikely to be random.

On the macro side, the market has rotated risk-off. BTC has closed two straight weeks in the red, correcting nearly 10% off its ATH. Notably, the total crypto market cap has erased $130 billion over the past three days.

Consequently, Bitcoin’s Fear & Greed Index plunged 20+ points to 44, sliding into “fear” territory for the first time in two months. Simply put, BTC’s $112k support is now staring down a stress test.

Source: Glassnode

Historically, dips into “fear” have often preceded rebounds, like mid-June, when BTC pulled back 11% from its $110k ceiling and the index dropped to 42, before ripping BTC to its $123k ATH in under a month.

But the flip side is clear too. Back in the mid-Q1 to early Q2 cycle, “extreme fear” aligned with BTC’s $74k bottom, locking in Bitcoin’s worst quarter in three years. 

In parallel, Tether’s rapid $2 billion mint adds weight to market structure. According to AMBCrypto, investor positioning around this liquidity could dictate Bitcoin’s next directional leg.

USDT liquidity shapes BTC’s positioning

Tether’s $1 billion mint could signal either bullish or bearish tilt.

Notably, Bitcoin’s slide into “fear” but above “extreme fear” shows investors aren’t capitulating. In essence, rebound conviction remains, with FOMO still lurking on the sidelines.

Meanwhile, USDT net flows turned positive alongside the mint, with 470 million USDT shifting across exchanges. The result? Bitcoin clawed back 1.27% from its $112k open.

Source: CryptoQuant

Put together, Bitcoin’s bottom might be closer than it looks. 

Tether’s liquidity injection hit a risk-off market, but there’s no real “flight to safety” signal yet. In fact, the Fear & Greed Index bounced 6 points to neutral (50) at press time.

Meanwhile, USDT flows onto exchanges are heating up, setting the stage for a mid-June-style rebound, with $112k shaping up as a sweet spot for a push back toward price discovery.