When the 30-day moving average of Tether’s velocity (volume divided by market capitalization) is placed over Bitcoin’s price movements, it seems clear that we are due for a correction. Tether issuances also stopped mid-July, right when the Bitcoin price peaked.
It’s often been said that every time new Tether (USDT) is minted, the Bitcoin price tends to follow a few weeks later. The same can be said in reverse, however. Now, the leading stablecoin is giving traders some bearish signs — which may indicate that short-term pain is coming.
When the 30-day moving average of Tether’s velocity is placed over Bitcoin’s price movement, an interesting trend is observed. Generally speaking, every major uptick in the 30-day MA of Tether’s velocity eventually has been followed by a similar increase in Bitcoin’s price.
Starting in January 2019, the price of Bitcoin has followed this metric quite closely.
The issue is that this same USDT metric has plummeted this month — and it seems increasingly likely that Bitcoin will follow if this rule holds true.
Moreover, as Vilecario the Tether Whisperer (@CasPiancey) writes, Tether issuances also stopped in late July. This also happens to be around the same time Bitcoin’s price reached a local high, which occurred in mid-July.
Some speculate that the reason Tether has ceased minting new USDT is due to the NYAG court case, which has yet to be ruled on.
The printing of USDT and mapping the 30-day MA for the stablecoin’s velocity have both been among the best metrics for predicting Bitcoin’s price movements. This could easily change in the future but, given that retail demand is still quite small, Tether’s overbearing influence on the market cannot be understated.
In short, we may be in for a sharp decline in late-August or early-September if this correlation holds true — as it has all year.
Do you believe that Tether and Bitcoin are this closely correlated? Do they tend to move in tandem with each other? Let us know your thoughts in the comments down below.