Institutional investors have halted their accumulation of stablecoins over the past two days, causing Bitcoin’s price to drop below a key psychological level.
During the past 24 hours, the Bitcoin (BTC) price fell 3.9% to trade at $58,930 as of 08:03 am UTC on Aug. 12, falling from a weekly high of $62,510.
The drop below the $60,000 mark was likely caused by institutions stopping their stablecoin buying frenzy, according to an Aug. 12 X post from onchain analytics platform Lookonchain:
“Institutions seem to have temporarily stopped buying, and the price of $BTC dropped 4.5% today! We noticed that institutions stopped receiving $USDT from #TetherTreasury and transferring it to exchanges 2 days ago.”
The lack of institutional stablecoin inflows to crypto exchanges can signal a lack of buying pressure and investor appetite for the underlying asset, as stablecoins are the main on-ramp from the fiat to the crypto world used by investors.
Tether’s previously minted $1.3 billion marked the local bottom
Tether issues the world’s largest stablecoin, Tether (USDT), and has minted over $1.3 billion worth of stablecoins from the market bottom on Aug. 5 to Aug. 9.
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The $1.3 billion was transferred to some of the most popular centralized cryptocurrency exchanges, including Kraken, Coinbase, OKX and Bullish.
The Bitcoin price bottomed at a five-month low of above $49,500 on Aug. 5 and staged an over 21% recovery to above $60,000 by Aug. 9.
The Bitcoin price could stage a recovery above the $60,000 psychological resistance once large institutional stablecoin inflows resume.
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Bitcoin needs to reclaim $60,000 for more upward momentum — Analyst
In terms of technical analysis, the Bitcoin price needs to reclaim $60,600 for the next leg up, according to popular analyst Rekt Capital, who wrote in an Aug. 10 X post:
“Bitcoin is doing all the right things to confirm $60,600 as support so as to position price for a revisit of $65,000+ over time.”
However, inflows to the United States-based spot Bitcoin exchange-traded funds (ETFs) remain low. The US Bitcoin ETFs saw over $89 million worth of net negative outflows on Aug. 9, according to Farside Investors data.
ETF inflows can significantly contribute to a cryptocurrency’s price appreciation. For Bitcoin, ETFs accounted for about 75% of new investment in the cryptocurrency by Feb. 15 as it surpassed the $50,000 mark.
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