Bitcoin Price Shaped by Stablecoins, Fiat, and Spot ETFs Amid Market and Political Uncertainty

Stablecoins, fiat USD, and spot ETFs influence the price of Bitcoin during market fluctuations and political events.

Ki Young Ju, the founder and CEO of CryptoQuant, claims that stablecoins, fiat USD, and spot ETFs are currently influencing the price of Bitcoin. These three primary buy-side liquidity channels are impacting the crypto's price and market trajectory until June.

Recent statistics show that the stablecoin market cap has increased, but it remains relatively close to its previous ATH when compared to the BTC market cap. According to market analyst Ki Young Ju, the stablecoin exchange reserves ratio is also close to these ATH levels. This suggests that stablecoins have already been used in buy-side liquidity, and further inflows of stablecoins may be needed to initiate another significant upswing in the event of additional considerable price movements.

At the same time, the Coinbase premium has been in the negative territory for the past week, which could be due to the overall market sentiment and lack of strong fiat inflows that would contribute to increasing the price of Bitcoin. This trend suggests that further price momentum can be sustained with new injections of fiat capital.

Spot ETFs Faced Challenges as Bitcoin Price Dropped, with Analysts Discussing Potential Rebound and Buying Opportunities With Bitcoin experiencing a substantial drop in price, some market participants are considering the potential buying opportunities. As the crypto market continues to navigate the impact of upcoming events and price fluctuations, here's a summary of some key updates and commentary.

The net average performance of Spot ETFs has been in the negative territory for the past two weeks. Some analysts anticipate that these exchange-traded funds may experience a resurgence, considering that Bitcoin might mitigate the political risks associated with the upcoming events of the year.

However, Bitcoin experienced a significant drop of 6.26% in a single day, marking the biggest drop in almost 100 days. This has led market experts to discuss the feasibility of buying opportunities now, considering Bitcoin's historical performance after similar price decreases.

Some highlight the potential for a price recovery, as Bitcoin's Relative Strength Index (RSI) is indicating an oversold position. At comparable RSI levels in the past two years, there was a substantial price increase. Others, like Samson Mow, suggest that the current price movements are more driven by sentiment and fear than large holders selling at a loss. According to Mow,

“Everyone selling Bitcoin now will regret it within a year. I’m talking about the ‘biggest mistake of my life’ level of regret. Deathbed lamentation level regret.”

Upcoming US Election and Market Sentiment to Shape Future of Bitcoin Amid Diverging Political Stances As the year progresses, the upcoming US presidential election and the candidates' varying stances on cryptocurrency are also set to influence the future price of Bitcoin.

The market is apprehensive about this topic, especially considering former US President Donald Trump's statements regarding accepting crypto campaign contributions and endorsing Bitcoin mining.

In contrast, the current administration's approach seems to differ from Trump's stance. The campaign of President Joe Biden is reportedly reaching out to the crypto industry for input on digital asset policies, shifting away from his administration's less favorable stance on cryptocurrency.

According to CryptoQuant's Exchange Flow Multiple for Bitcoin, there is less than 0.6 Exchange Flow, which indicates a lack of speculative demand in the market. This level was last seen at the $30K price point, after which the uptrend usually continued.

The negative Coinbase premium will also put pressure on miners and long-term holders to sell. This ties into the market's bearish trend, which is being influenced by traders' entry-level prices, the lack of new fund injections into ETFs and custody services, and the demand, with some market participants also noting that the demand for Ethereum is outpacing that of Bitcoin, which could be signaling the beginning of an altcoin season.

News source：https://www.kdj.com/cryptocurrencies-news/articles/bitcoin-price-shaped-stablecoins-fiat-spot-etfs-market-political-uncertainty.html

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