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USDT Supply Ratio Increases Dramatically, What This Means For Crypto Market?

Elena R - Coinpedia
2022-08-11 06:09
In just three months, the USDT supply ratio on cryptocurrency exchanges experienced a dramatic increase. Between May and late July, the space tracked this evolution during two crucial phases of the cryptocurrency markets. Moments like the time of the Crypto Winter’s coldest touch and the market’s sluggish comeback. The rise in the percentage of USDT supply on exchanges sends two important signals.
The ratio of the overall supply of USDT on exchanges has more than doubled since May, as reported by Santiment, On May 9, the percentage in the neighborhood was 19.7%, but it has now risen to 42%. The graph also reveals a rise that was specifically documented around the time the markets fell in June. This can be a sign of investor capitulation or a decision to buy the drop.
“The surge could indicate an interest in institutional and retail investors to enter the markets, with a recovery in sight. This translates to a high in buying power that was last seen in early 2020.”
Most investors would like to make money from the impending surge now that the markets are exhibiting indications of recovery. As a result, as they are ready to crack some deals, they would try to boost their stablecoin holdings. Since USDT is the preferred stablecoin, its supply ratio on exchanges might have increased dramatically.
The ratio of #Tether on exchanges has gone from 19.7% on May 9th to a whopping 42.0% three months later. This can be viewed as both a signal that traders have taken profits as prices have rebounded, as well as a sign of a 2-year high in buying power.
— Santiment (@santimentfeed) August 10, 2022

On the other hand…

On the flip side, this spike can be an indication of a wave of market participants taking profits. As a result, all assets, including Bitcoin, Ethereum, and others, fell to alarming levels. Particularly ETH plunged to three figures, and BTC dropped below $18,000.
At this point, many investors made trades to purchase the dip while others held out hoping for a recovery. The long-awaited comeback finally occurred in July, albeit on a small scale. Despite occasional obstacles, the modest recovery continued throughout August.
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