Bitcoin Rally May Face Headwinds as Stablecoin Minting Lags

Bitcoin (BTC) price is trading with a bullish bias, confronting the resistance at $94,000 with prospects for more gains. However, a renowned analyst says to temper Bitcoin rally hopes, citing a crucial indicator.

For a sustained rally, capital needs to enter the market consistently, as this provides the liquidity needed for further upside.

Lagging Stablecoin Indicator Threatens Bitcoin’s $100,000 Target

The Bitcoin price outlook was bullish on Wednesday during the early hours of the Asian session. Bullish technical formations, including the falling wedge pattern, hinted at further upside for the pioneer crypto.

As of this writing, Bitcoin was trading for $93,714, with up to 9% of a 20% potential rally still in the cards. The falling wedge pattern’s target objective is the 20% climb, determined by measuring the longest height of the wedge and superimposing it at the breakout point.

This bullish reversal is already in action after Bitcoin price flipped the critical resistance at $85,000 into support and converted the support zone into a bullish breaker.

Based on the daily chart above for the BTC/USDT trading pair, a daily candlestick close above $91,575 could set the tone for Bitcoin’s price to move further upside.

Increased buying pressure beyond the immediate resistance at $94,000 could see Bitcoin price eye $100,000 next. BTC could extend to the $102,239 target objective in a highly bullish case.

Technical indicators align with this outlook. The Relative Strength Index (RSI) is rising, recording higher highs, suggesting growing momentum. Its position below 70 indicates there was still more room upward before BTC was overbought and at risk of correction.

Similarly, the Awesome Oscillator (AO) histograms flashed green, indicating bullish control. Their position above the midline (in positive territory) adds credence to the bullish thesis.

However, 10x Research’s head of research, Markus Thielen, urges caution, citing the lagging stablecoin minting indicator.

“Given that our stablecoin minting indicator has yet to return to high-activity levels, we remain cautious about the sustainability of the current Bitcoin rally,” Thielen wrote in the latest 10X research.

The stablecoin minting indicator refers to the issuance or creation of new stablecoins, such as Tether (USDT) or USD Coin (USDC). Stablecoin minting often signals capital entering the crypto market, and it can have several implications for Bitcoin’s price.

Among them are increased liquidity and confidence in the market as investors anticipate profitable opportunities. Both of these are signs of potential bullish pressure.

According to the analyst, the absence of strong stablecoin inflows “raises questions about follow-through.” Bitcoin’s rally to the $100,000 psychological level remains under threat.

It is worth noting that stablecoins are less significant as a leading indicator for Bitcoin’s price. Analysts cite other factors like institutional inflows via ETFs (exchange-traded funds) or Strategy (MSTR) purchases.

Nevertheless, if profit-taking commences, a candlestick close below the midline of the bullish breaker at $86,562 could reverse the trend. This could plunge Bitcoin back into consolidation below the crucial level of $85,000.