Bitcoin (BTC) Sees Relief Rally after Tether (USDT) Injection
In one of the worst weeks for traders, Bitcoin prices sank more than 30%, but later recovered somewhat after an intervention from the Tether treasury.
The crypto markets saw a dramatic sell-off over the weekend, which pushed Bitcoin (BTC) prices down decisively under $4,000. Lows on November 24 reached $3,795.16 - levels not seen since the end of September 2017, when prices briefly plunged under $4,000 on news of China’s ban on exchanges.
This time, the tremors in the markets were calmed by 50 million Tether (USDT) moving from the treasury into the Bitfinex wallet. In the past, injections of USDT were used to cause a BTC price rally, but this time, Tether intervenes on the downside, attempting to stem the bleeding as previous enthusiasts capitulate and sell.
The crypto markets have seen an outflow of easy liquidity, and the presence of stablecoins has been key to liquidity. During the significant slide in the past week, more than 55% of BTC trades were in the USDT pairs. This trading profile made it possible for the 50 million USDT injection to sway the market. In general, the influence of USDT expanded to highs of 25.93% of all trades, serving as life support for crashing altcoins.
The effect of the USDT injection led BTC to $4,024.18, up more than 7% in the past day. But the recovery is still extremely fragile, with the latest sell-off seen as a capitulation-style event. It is uncertain whether the USDT injection would have a lasting effect, and now the Tether treasury has just 626 million USDT left for further interventions.
BTC prices have defended several key levels for a while before crashing down, usually on a mix of selling panic, bot activity, and capitulation. This time, the USDT was used to preserve the $4,000 level, but there are still expectations BTC will fall under $3,000 and even under $2,000. The negative sentiment weighs down on the cryptocurrency, raising the prospect of further USDT injections near key levels.
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