Tether Supply on Exchanges Hit Record High As Bitcoin Eyes $100K Breakout

The cumulative supply of Tether (USDT), the world’s leading stablecoin by market share (~75%), increased to a new record high of 34.194 billion on Nov. 25 compared to 23.125 billion at the month’s beginning.

Rising Tether Supply Raises ‘Buy The Dip’ Scenario in Crypto Market

A higher supply of stablecoins on exchanges means there are more funds available for immediate trading. In other words, market participants are depositing stablecoins into exchanges, likely preparing to purchase cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), or altcoins.

However, an increase in stablecoin reserves on exchanges can also happen when traders convert their volatile crypto holdings into fiat-backed tokens during periods of market uncertainty or price declines. Unlike outright cashing out to fiat currencies, these stablecoins remain within the ecosystem, suggesting that traders are positioning themselves to re-enter the market.

This trend has been particularly evident in November, as the rising Tether supply on exchanges has coincided with a 40% surge in the cryptocurrency market’s total capitalization. During this period, Bitcoin’s price climbed sharply, rallying from approximately $70,000 to within $200 range of its long-awaited $100,000 milestone.

“Over the past week, we’ve had a crisis of net outflows in the middle. But then again, we’ve had a steady net inflow as dollars have come into the crypto market in the end,” noted SignalQuant, an on-chain analyst at data analytics platform CryptoQuant, adding:

“This has allowed the [Bitcoin] price to continue to make higher lows. Its price will break the $100,000 mark at any moment without a significant correction based on the net inflows trend.”

Simply put, the stablecoin’s netflow trend indicates that as long as the inflows of dollar-pegged tokens continues across exchanges, there will be no meaningful correction in price. So, traders will buy the dip even if the price corrects.

When Will Bitcoin Hit $100,000 And Beyond?

One critical metric, the Choppiness Index, which measures the strength of Bitcoin’s trend, shows upside exhaustion on the weekly timeframe. In other words, Bitcoin’s rally may need a period of consolidation before it resumes its upward trajectory. Historically, similar phases have lasted around three weeks.

Looking back to the 2020 bull cycle, Bitcoin’s first post-consolidation rally also hit exhaustion in late November, leading to an 18% correction before rebounding in mid-December.

If history rhymes, Bitcoin could see its next rally begin in the second half of December, with monthly trends helping to minimize the scale of any short-term corrections.

Can Bitcoin Reach $125,000 By Year’s End?

The on-chain setups above aligns with Bitcoin’s ongoing bull flag breakout that points to a rally toward $125,000 by the end of 2024.

Bull flags form when the price consolidates inside a downward-sloping parallel channel after a strong upside move. Meanwhile, they resolve when the price breaks above the upper trendline and rises by as much as the previous uptrend’s height.

Applying this technical rule to BTC/USD’s current pattern, and matching it with bullish stabelcoin and on-chain indicators, presents $125,000 as the primary upside target by the year’s end.