Tether's $1.3B USDT Transfer to Exchanges May Have Fueled the Strong Recovery in the Crypto Market

This week’s Bitcoin [BTC] market crash, at the time of writing, ranked as the 13th largest capitulation event in global financial history.

Bitcoin’s [BTC] market crash, at press time, was ranked as the 13th largest capitulation event in global financial history. This is a significant milestone, no matter which way you look at it because as cryptocurrencies integrate within the broader financial apparatus, we are likely to see larger booms and busts.

To its credit, however, the crypto-sector recovered in a big way. After hitting new monthly lows, the market bounced back, with top digital assets like Bitcoin and Ethereum rallying by over 20% on the charts.

In fact, entity-adjusted realized loss data showed that Bitcoin recovered from the crash, with its current value now exceeding $1.3 billion.

Source: Glassnode

USDT $1.3B onto exchanges

The recent Bitcoin crash on 5 August prompted Tether’s Treasury to move $1.3 billion USDT to exchanges. This influx probably fueled the crypto market’s strong recovery.

The same was highlighted by market analyst Pro Blockchain in a breakdown of how Tether’s actions increased USDT supply on exchanges. As a result of the same, the growing USDT supply is expected to influence future cryptocurrency prices, potentially driving them higher on the charts.

Source: Pro Blockchain

Historical data projections for USDT dominance v other cryptos

When USDT dominance increases, cryptocurrency prices usually decrease, and the opposite happens when USDT dominance decreases.

On the 3-day chart, both USDT and other cryptocurrencies have followed this trend closely. A key moment on 13 October 2023, for instance, highlighted a drop in USDT dominance, leading to a rise in other crypto prices.

If the upward trend in USDT breaks down, the reverse should happen for cryptocurrencies, indicating potential price hikes. Put simply, the recent rejection from the top of the USDT dominance might be a sign that crypto prices could rise soon.

Source: TradingView

Bitcoin retail inter at 20%

At press time, BTC was trading close to $60,000. However, retail interest fell to about 20% of its previous levels. And yet, Bitcoin has weathered the recent market crash and could see further price hikes this year.

Fed Liquidity rebounds strongly

Finally, while Net Fed Liquidity dropped by $160 billion last week, it quickly recovered by $170 billion.

Both the S&P 5300 and Bitcoin saw significant declines, with the S&P 500 down 3% and Bitcoin down 30%.

However, this week they have both rebounded, with the S&P 500 up 4% and Bitcoin up 22%. The increase in USDT on exchanges can potentially sustain a rise in crypto assets across the board.

Source: TradingView

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