Bitcoin is on the verge of a potential bottom formation as Tether’s USDt market cap has seen a significant drop, resembling historical patterns that preceded a surge in Bitcoin’s price.
Key Insights:
- Tether’s USDt has displayed signals that previously led to a 100% rally in Bitcoin’s price.
- The current price is testing two significant support levels that often indicate strong rebounds.
Tether Signals Similar to 2022
On Sunday, Tether’s market cap fell by $3.1 billion over 60 days, hitting a crucial zone similar to those seen during Bitcoin’s 2022 bear market downturn. This kind of drop previously coincided with Bitcoin’s low of around $15,500 amid maximum fear and forced selling.
When USDt’s market cap declines sharply, it often signals a liquidity drain or risk-off sentiment.
“The current 60-day contraction indicates extended capital outflows, pointing to stricter conditions in crypto liquidity,” stated CryptoQuant contributor MorenoDV.
Bitcoin Shows Familiar Technical Patterns
Bitcoin’s weekly chart reveals a familiar setup that has historically indicated market bottoms. Current analysis highlights that Bitcoin is testing major support, which has historically meant significant recoveries are on the horizon. With Tether’s market cap shedding $1 billion recently, similar patterns have often accompanied periods of high volatility or significant price corrections for Bitcoin. Thus, if Tether’s dominance continues to decrease and seller exhaustion is confirmed, Bitcoin’s chances of recovery may increase.
This article does not provide investment advice. Every investment includes risks, and it’s essential for readers to conduct their own research before making financial decisions.
