As the Cryptocurrency market continues to evolve, movements are being observed that could lead the price of Bitcoin (CRYPTO:BTC) to new highs.
What happened
According to CriptoNoticias, two key factors are converging and projecting a possible increase in the price of Bitcoin, which could also drag the entire cryptocurrency market into an upward trend.
The first factor is related to the BTC reserves on exchangesThese reserves have been noticeably declining, a trend that has historically preceded strong price rallies. The reason is that a smaller amount of BTC available on exchanges reflects reduced selling pressure as investors transfer their funds to wallets, decreasing the circulating supply.
According to a trader’s analysis Tarekonchainshared by the on-chain data provider CryptoQuantthis phenomenon is an indicator that could signal an upcoming rise in the price of Bitcoin.
The second factor that is playing a crucial role is the Increase in stablecoin reservesmostly Tether (CRYPTO:USDT) on exchanges. This increase suggests that investors are preparing to buy assets like Bitcoin, as stablecoins represent capital ready to be deployed.
When their presence grows on exchanges, it indicates latent buying interest, which usually translates into a possible increase in demand for Bitcoin. In addition, stablecoins, being linked to a fiat currency such as the US dollar, function as a tool to manage market volatility, allowing investors to protect their capital during periods of uncertainty and buy back cryptocurrencies when conditions improve.
The trader argues that, taken together, the decline in BTC reserves and the rise in stablecoins set the stage for a possible “bullish breakout in prices.”
With BTC supply becoming increasingly limited and buying power growing, the market looks set for a significant upward move. Throughout Bitcoin’s history, this imbalance between supply and demand has been a key driver of price increases.
However, it is important to note that an increase in exchanges’ stablecoin reserves, especially USDT, does not guarantee that bitcoin will rise immediately.
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Why is it important?
The recent review of the technical standards for stablecoins by the European Commission could have a significant impact on the cryptocurrency market.
Within the framework of the Markets in Crypto Assets (MiCA), technical standards for stablecoins have been developed with the aim of establishing a comprehensive approach in this rapidly growing sector. European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) submitted 15 technical standards related to stablecoins to the European Commission for review and eventual approval.
This regulation could influence the stability and confidence in the use of stablecoins, indirectly affecting the demand for Bitcoin and other cryptocurrencies.
You can also read: China nears historic lows: crisis drags down global emerging funds
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