Bitcoin's Stagnant Rally Blamed on Dwindling Stablecoin Supply
The cryptocurrency market is experiencing an 'unfunded' rally, as evidenced by Bitcoin's inability to follow the S&P 500 higher. One key issue is the dwindling supply of stablecoins, which has been declining since mid-May, with approximately $14 billion in liquidity allegedly disappearing from the market.
The loss of this easily accessible liquidity could hinder a sustained rally in cryptocurrencies. Historically, liquidity has had a significant impact on the cryptocurrency ecosystem, and its decline, combined with falling expectations, may not be enough to drive growth. This is reflected in Bitcoin's chart, which has been trading between $62,000 and $66,000 for most of July and August.
However, there are some signs of improvement, as the RSI near 53 indicates a slight increase in momentum, and short-term moving averages have stabilized around $63,900. Nevertheless, Bitcoin remains below long-term resistance at $71,450 and below the more significant moving average at $66,300.