Bitcoin Price Surge Triggers Debate Over Selling Pressure Exhaustion

Bitcoin's recent price surge above $65,000 has led to a contraction in Tether's (USDT) market capitalization by nearly $4 billion over two months. According to CryptoQuant, this decline may signal exhaustion of selling pressure rather than further downside, as periods of steepest USDT supply contraction have historically coincided with the late stages of downtrends.

CryptoQuant noted that approximately $870 million worth of USDT vanished in just 11 days alone, and the pace of decline is difficult to explain solely through past redemptions. However, historical patterns suggest that this contraction may be a sign of weak new demand for Bitcoin and other digital assets rather than accelerating selling pressure.

Bitcoin's correlation with gold has also recovered above 0.6, hinting at a potential revival of the 'digital gold' narrative. This is in contrast to certain technical indicators, including MACD and RSI, which warn of a possible short-term top followed by further declines.