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Bitcoin price falls by 5.5% to $56K, sparking caution as USDT hits $118B market cap.
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Stablecoin market surges to a record $177 billion amid market uncertainty.
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Traders split as 54% expect further Bitcoin drop, while 46% hold long positions.
After the recent market drop, Bitcoin faced a sharp decline, with its price falling to $56,520, marking a 5.5% decrease over the past seven days. This downturn doesn’t necessarily point to strong selling pressure but rather suggests a sense of caution among traders. They might be converting to USDT to secure profits from market volatility or simply waiting for a better buying opportunity. So, what’s the strategy here?
Stablecoin Market Cap Record Surged
The stablecoin market has surged this week, hitting a new all-time high of over $177 billion. This growth has been driven by increased institutional interest in cryptocurrencies, particularly following the recent launch of spot Bitcoin and Ethereum ETFs.
The steady rise in the stablecoin market reflects growing confidence in cryptocurrencies and suggests that stablecoins could play a crucial role in the future of finance.
Leading this growth is USDT, which has a market cap of $118 billion, showing a slight increase even in a bearish market. It’s no surprise, as USDT holds a dominant 70% share of the stablecoin market.
Trader’s Playing Safe Amid Market Volatility
Analyzing the Bitcoin chart reveals that traders are divided between anticipating a potential decline and holding out for more profit. Examine the 12-hour chart, there’s a noticeable split with 46% long positions versus 54% short positions.
The price of $BTC continues to decline while the $USDT market cap steadily rises. pic.twitter.com/M0dtrmkobx
— Bitcoinsensus (@Bitcoinsensus) September 4, 2024
This dominance of short positions suggests that many traders are expecting a further price drop before considering new long positions. If bulls don’t step in, Bitcoin might plunge to its previous support level of around $54K before any potential correction.
However, if the market proves more resilient or if unexpected bullish news emerges, short sellers could be forced to buy back their positions, potentially driving Bitcoin past the $60K mark.