In order for the crypto market to initiate a robust bull run, investors need to demonstrate their willingness to acquire digital assets in substantial volumes. Following a prolonged period of lackluster performance, it appears that crypto enthusiasts are regaining confidence in the market, evident in their collective efforts to re-engage with increased buying power.
Crypto’s purchasing power has recently surged to levels not seen in the past six months
A noteworthy development highlighted by the on-chain data tracker Santiment is the increasing accumulation of Tether’s USDT stablecoin by cryptocurrency investors. Santiment points out that there has been a significant rise in the total amount of USDT held on exchanges recently. This metric, which considers the total USDT held across the leading exchanges, has surged from a mere 17.6% of the stablecoin’s circulating supply to an impressive 24.7%. This 7.1% increase indicates a growing interest among investors to re-enter the market, which could potentially have a bullish impact on prices.
As usual, the prominent whales in the crypto space spearheaded this accumulation trend. The ten largest wallets witnessed a collective increase in their holdings, surging from $7.23 billion to over $9.42 billion within the same time frame.
When investors begin to increase their holdings of stablecoins, it indicates a preparedness to re-enter the digital asset market, demonstrating their current buying potential. With the total amount of USDT held on exchanges reaching a 6-month peak, this could signify the onset of the most substantial rally witnessed in the market in 2023.
The accumulation of assets, spreading across both large and small wallets, indicates that this sentiment is not confined to a specific group of investors. Instead, it suggests that a broad spectrum of investors recognizes real opportunities for an upward trend and seeks to capitalize on potential gains for themselves.
What to expect is that after accumulating a substantial amount of stablecoins, as highlighted in the Santiment report, crypto investors typically bide their time for an opportune moment to put these funds to use. This typically occurs during market downturns, which can result in a significant market-wide decline.
At this stage, investors tend to seek re-entry into cryptocurrencies when they appear to be trading at discounted prices. This often aligns with the formation of market support levels, and it’s a strategy employed to take advantage of potential price surges that tend to follow shortly thereafter.
Primarily, these accumulated stablecoins are typically initially allocated to the largest digital assets like Bitcoin (BTC) and Ethereum (ETH). After generating substantial profits, investors often transition their funds into smaller-cap coins, which is why altcoins may experience a delay in following Bitcoin’s recovery.
In this scenario, it’s plausible to anticipate Bitcoin’s price surging towards $29,000 and subsequently pushing the overall crypto market capitalization back above $1.1 trillion.
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