Liquidity is growing in the crypto market, yet it remains largely unallocated. Over the past 30 days, more than $3.65 billion has been injected into the market through the issuance of USDT, as per the latest analysis by CryptoQuant.
This rise in capitalization indicates a larger infusion of external capital into the crypto market, as the issuance of new USDT requires backing by assets and goods from the traditional financial sector. While this surge in liquidity often correlates with increased demand for digital assets, the impact is not always immediate.
Currently, much of the capital tied to these stablecoins has yet to exert buying pressure on the market, remaining dormant on the sidelines.
This unallocated liquidity represents untapped “firepower” that, if deployed, could swiftly influence market conditions.
Institutional investors, in particular, may be strategically positioning themselves through time-weighted average price (TWAP) orders or algorithmic trading, methods designed to minimize short-term price fluctuations.
These tactics allow for a gradual entry into positions, potentially delaying the visible effects of the new liquidity on market prices. As a result, while the market is primed, the full impact on prices and behavior remains to be seen, leaving it in a state of anticipation for potential sudden movements.
Bitcoin briefly touched $55,500 on Wednesday, its lowest level since August 8, nearly wiping out last month's gains. It has since seen a modest recovery, trading above $56,700.