What is the Key to Bitcoin’s Next Bull Rally? Analysts Chip In

Bitcoin’s price has been stagnant since its peak in March due to tighter US monetary policy, which has reduced the supply of stablecoins, according to CryptoQuant analysts.

“The reason why Bitcoin has not been able to rise further is mainly due to the tightening of monetary policy in the United States since March 2022,” they reported on July 3.

As a result, the total supply of stablecoins began to decline in early 2022 when the Federal Reserve began raising interest rates.

Terms and Conditions Bitcoin Rise: Stablecoin Liquidity

The bottom line is that in order to #Bitcoin “To go seriously up, we need to see an increase in stablecoin liquidity and circulating supply” – By @MAC_D46035

Read more 👇https://t.co/2XfjofHghh pic.twitter.com/uCNtzLvi2l

— CryptoQuant.com (@cryptoquant_com) July 3, 2024

Impact of US Monetary Policy

The supply of stablecoins began to rise again in late 2023, but prices have remained stubbornly high at over 5% for over a year.

analyst male Bitcoin price has been rising due to expectations of lower interest rates and fiscal policy bringing liquidity to the markets.

They concluded that “increased stablecoin liquidity and circulating supply through more accommodative monetary policy in the United States” is necessary for Bitcoin to enter a bull market.

Until then, Bitcoin may continue to trade sideways or correctively, suggesting that investors should take a long-term perspective.

Low interest rates mean that cash has become less attractive as an investment, and higher-risk assets like cryptocurrencies or technology stocks have become more attractive.

The Federal Reserve is expected to cut interest rates in September, provided economic data remains positive.

Bitcoin price has fluctuated between a high of $50,000 and a low of $70,000 over the past four months.

Stablecoin Ecosystem Overview

The market cap of stablecoins has been steadily rising over the past few months. It currently stands at $161 billion, representing about 7% of the total cryptocurrency market. That’s less than half of what it was at its peak in 2022.

Tether remains the market leader by a clear margin, with a market share of nearly 70%. Furthermore, the supply of Tether is currently at an all-time high of $112 billion.

Its closest competitor, Circle, has a market share of around 20% with a circulating supply of $32.5 billion. Maker’s DAI is the third-largest stablecoin with a market cap of $5 billion and a share of just over 3%.

In June, Circle CEO Jeremy Allaire predicted that stablecoins could account for 10% of “global economic money” over the next decade or so.