Bitcoinbitcoin, ethereum and other major cryptocurrencies BNBbinancecoin, XRPripple, cardanocardano, dogecoindogecoin, polygon and solanasolana have rocketed higher over the last month—part of a JPMorgan “catastrophic,” doomsday scenario that could be just getting started.
The bitcoin price has topped $30,000 per bitcoin for the first time since June last year after Coinbase chief executive Brian Armstong confirmed a long-awaited bitcoin upgrade and ethereum teeters on the verge of its own game-changing update. The broad crypto boom over the last month has largely been put down to rising expectations the Federal Reserve will soon ease up its program of historical interest rate hikes.
Now, as traders brace for the latest inflation data that could cause bitcoin, ethereum and crypto price chaos, one closely-watched analyst has said there could be another overlooked catalyst behind the latest crypto rally.
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“Stablecoin tether (USDT) has now reached a market capitalization of $80 billion, an increase of $13.8 billion,” Markus Thielen, head of research and strategy at Matrixport, wrote in an emailed note, adding tether’s market cap surge has been “driven by aggressive minting and issuance on the trontron network,” which accounts for $44 billion of tether.
“The issuance of USDTs on ethereum accounts for another $35 billion but the spread between USDTs issued on tron and ethereum is now widening significantly. The all-time high in USDT issuance was at $82 billion in May 2022 and tether is now only $2 billion away from it.”
Many crypto watchers have pointed to the possibility of the Fed flipping dovish in the face of a peaking jobs market and a higher risk of recession as pushing up the bitcoin price.
“Higher-than-expected U.S. jobless claims suggest the Federal Reserve may soon halt rate hikes, which could benefit risk assets like crypto,” Rachel Lin, chief executive of crypto trading platform Synfutures, said in emailed comments. “Conversely, a higher unemployment rate could signal a looming recession, negatively impacting all assets.”
Tether was hit by a series of redemptions last year as crashing crypto prices caused chaos for crypto companies, pushing some of the biggest names in the business into bankruptcy and culminating with the collapse of major crypto exchange FTX in November.
While rival stablecoins Circle’s USDC and the Binance-branded BUSD have struggled this year due to the banking crisis and regulatory action, tether has seen inflows.
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“Circle USDC lost $11.8 billion and Paxos-Binance BUSD lost $9.4 billion,” Thielen wrote. “Obviously, those large moves had implications for crypto assets. In addition, the volume of spot vs. derivatives has now declined to just 11%—this means that for every $11 traded in spot, $100 dollars are traded in derivatives. This is the lowest ratio since May 2022 and is a sign of ‘pure speculation.'”
Meanwhile, other crypto market watchers are feeling up-beat following the last month’s $200 billion bitcoin, ethereum and crypto price pump.
“Bitcoin’s 10-month high should be a confirmation that we’re seeing a return of a crypto bull market,” Katharine Wooller, a director at Coincover.
“Since the start of 2023, the crypto market has faced regular turmoil in the form of regulatory challenges and the collapse of crypto companies indicative of wider systemic problems. Yet, despite this, the market continues to perform well against all odds.”
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