USDT Supply Increase and Bitcoin Price: Is There a Correlation?

According to crypto insights provider Matrixport, new USDT issuance has slowed since mid-April but has recently begun to rise again. This uptick, as suggested in a post on X (formerly Twitter), indicates a bullish trend for the cryptocurrency market, with funds potentially shifting from traditional financial markets to crypto.

On July 15th, Whale Alert reported that stablecoin issuer Tether (USDT) minted $1 billion worth of USDT. This move initially sparked speculation of a bull market, but Tether CEO Paolo Ardoino clarified that the USDT was created as inventory for chain swaps, not for immediate circulation.

Nonetheless, the issuance of USDT often signals a “risk-on” attitude among investors, who favor riskier assets like cryptocurrencies over traditional safe-haven investments. Increased USDT supply reflects growing enthusiasm for the crypto market, potentially leading to heightened demand as investors anticipate further gains.

Historically, USDT issuance has correlated with Bitcoin price movements. During the 2020-2021 crypto bull market, USDT’s market value surged from $4 billion to $83 billion by mid-2022, establishing itself as a preferred trading pair for cryptocurrencies on regulated exchanges.

Increased USDT issuance by Tether adds liquidity to the cryptocurrency market, often leading to increased trading volumes and supporting price increases. It also signals a willingness among investors to allocate funds to cryptocurrencies, facilitating market activity as USDT enables traders and investors to enter and exit positions easily.Since July 9th, USDT’s market cap has grown from $112.20 billion to $114.12 billion at the time of writing. While increased USDT issuance is generally seen as a positive sign, it’s crucial to consider other factors like regulatory news and macroeconomic developments, as these can also influence the market.