Speculators now face exciting new options after an unexpected increase in USDT on exchanges.
Significant progress is being made on the on-chain front in the present cryptocurrency scenario. The rising profile of Tether (USDT) on many exchanges may stimulate more extreme price swings.
Bitcoin (BTC), on the other hand, is trending in the other direction, with exchange reserves at multi-year lows.
Good news is spreading on the blockchain, especially in regard to the value of USDT, the stablecoin with the largest market cap among the stablecoins.
Such patterns have historically signalled turning moments, or bullish trajectories, in the prices of assets like Bitcoin and Ethereum. A similar pattern of rising USDT reserves was seen during the bull market in late 2020 and early 2021.
An increase in liquidity encourages purchasing activity, which might send prices soaring, therefore the introduction of a large stablecoin into exchange ecosystems is good news for investors.
At the same time that some really interesting things are happening with USDT, a very different story is developing with Bitcoin. Binance, Kraken, Coinbase, OKEx, and Bybit are just some of the major centralized exchanges whose Bitcoin reserves are noticeably low.
This phenomenon seems to be a two-sided sword, with pros and cons on both sides. While this may increase the likelihood of a supply-induced shock and subsequent price boom, it also shows that long-term HODLers are in limited supply due to the reduced availability of liquid BTC for trade.
However, with fewer coins trading on the market, volatility spikes and possible manipulation have been introduced into the environment.
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