Crypto analytics firm Santiment says shrinking stablecoin supply could be a sign that a massive Bitcoin (BTC) boom is on the horizon.
According to the market intelligence firm, the circulating supply of Tether (USDT) and USD Coin (USDC), the two largest stablecoins by market capitalization, has been declining dramatically since May 2022.
Santiment says that the volume of these two assets to be continued to fall even as the price of Bitcoin rises, which in the past predicted parabolic BTC rallies, namely in July 2021, just before the crypto king reached from the level of $29,000 to $69,000.
“Stablecoin circulation has continued to decline even in a growing market. We could say that [the] first significant increase occurred in declining traffic. Stablecoins tried to heat up strongly, but no, the market did not go up.
The best pattern could be [stablecoins] is still decreasing [during a] market recovery. Like nowadays. When stablecoins do not yet believe in recovery, they prefer to wait. We are probably witnessing the same as July 2021 now, at least in two stablecoins.”
Santiment also notes that Bitcoin’s price is now in line with its valuation based on the network value-to-transaction (NVT) model, a metric that aims to measure the price of an asset based on the ratio between its daily market capitalization and of daily traffic.
“Bitcoin jumped +18% the following July [the] The increasing bullish divergence of the NVT pattern in May and June finally saw a price rally come to fruition. With a neutral signal now, as prices have risen and contract circulation has eased slightly, August could go either way.”
Bitcoin is changing hands at $23,297 at the time of writing, down 1.25% on the day.
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