Unmasking the Gameplan Driving Bitcoin and Crypto Market

The digital currency ecosystem has seen a massive inflow of capital that suggests a bullish rally might lie ahead.

The crypto ecosystem’s valuation comes in at $1.65 trillion, with Bitcoin (BTC) being the clear leader. To sustain this valuation, new capital has to flow into the ecosystem and uniformly into all forms of asset classes ranging from BTC and layer-1 protocols, stablecoins, and even memecoins to showcase the inclusivity of the market. 

Market makers in this emerging crypto world are keeping their end of the bargain and capitalizing on the liquidity needed to power a robust market across the board.

The Place of Tether (USDT)

As the largest stablecoin in the industry, Tether (USDT) is central to the success of the many centralized exchanges and even their decentralized counterparts. To help sustain the market, Lookonchain revealed that the Tether Treasury has minted 1 billion USDT to inject into the market.

As the USDT in circulation is stacked up, Tether releases additional to replenish the inventory on the network when the deficit occurs. According to the Lookonchain data, Tether has minted a total of 8,000,000,000 USDT on both Ethereum and Tron networks in the past three months.

While Tether has faced immense backlash for this minting trend, the action remains pivotal to maintaining the market capitalization of USDT, which at this time comes in at $91,361,736,269. Usually, when Tether prints a lot of USDT, the crypto market starts moving upwards.

Steady Money Inflow into the Market

Top market analyst Ali Martinez observed that the crypto ecosystem has seen a total inflow worth over $24.2 billion since December 2021.

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According to the chart he shared, the market’s positive 30-day Capital inflows domiciled in USDT hit the highest level since at least April 2022. While considerably lower in dollar terms, the Stablecoin Net Position Change also recorded a mild run to its highest level since the start of the second quarter of 2022.

Around $24.2 billion are flowing into the #crypto market, the highest capital inflow since December 2021! pic.twitter.com/1cL75VlFAB

— Ali (@ali_charts) December 25, 2023

While this capital inflow is impressive, the likelihood of approval of a spot Bitcoin Exchange Traded Fund (ETF) product in the United States by the Securities and Exchange Commission (SEC) can tilt the balance positively in the near term.

With top asset managers like BlackRock and Grayscale Investments in the race, the product might usher billions of dollars in investor capital into BTC, thus helping to bolster the market’s liquidity history and ultimately power an immense bullish rally.