The outlook for Bitcoin (BTC) is showing signs of improvement as stablecoin liquidity increases and key market indicators signal a potential reversal of the recent deep correction.
CryptoQuant highlighted a significant expansion in the market capitalization of Tether USD (USDT), which usually leads to rising Bitcoin prices.
USDT’s market capitalization has grown by $5.75 billion over the past 60 days, exceeding its 60-day simple moving average of $3.46 billion. Historically, this movement indicates fresh capital entering the crypto market, which could support price momentum.
Additionally, on-chain data points out the overall stablecoin market cap increased even further in the past 60 days, leaping from $203.9 billion to $226.1 billion as of March 13. This is equivalent to an 11% increase.
However, the liquidity injection is not triggering any short-term rebounds. The crypto market cap has fallen 3.2% over the past 24 hours, reaching $2.72 trillion. Meanwhile, BTC has fallen by 3.3% in the same period, trading at $80,411.98.
Oversold territory
At the same time, on-chain data suggests that Bitcoin has reached an oversold zone following a period of strong correction.
CryptoQuant Korean community manager Crypto Dan pointed out that the proportion of Bitcoin holdings for less than one month surged in March and December 2024, reaching 23% and 24.5%, respectively.
This pattern preceded a correction, bringing the Market Value to Realized Value (MVRV) ratio to 1.8, close to the 2024 correction’s low of 1.71. If Bitcoin falls to the $70,000 range, the MVRV ratio would surpass levels seen during past correction lows.
However, market sentiment has weakened significantly, with altcoins surrendering most of the gains made over the past year. This suggests that further declines may not be necessary to reset the market, as it has already undergone substantial deleveraging.
Entering an oversold zone typically increases the probability of a rebound, though market conditions remain challenging.
The final phase of an upward cycle often involves heightened risk and investment difficulty, but as selling pressure diminishes, the likelihood of a price recovery grows.
Crypto Dan highlighted the strength and magnitude of any rebound, whale movements, and changes in on-chain data as key factors to monitor in the coming period. Additionally, correlations with traditional stock markets and macroeconomic trends will shape Bitcoin’s trajectory.
Lastly, he assessed that it is still too early to conclude that the market has entered a full-fledged bear cycle.
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