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The recent 10% upswing in Bitcoin price has changed crypto investors’ outlook from bearish to bullish. But this move could be in jeopardy due to stablecoin dominance. Therefore, BTC investors need to tread carefully as the uptrend could reverse.
Why is Bitcoin Price Rally In Jeopardy?
The upswing that kickstarted on September 6 propelled Bitcoin price up by 10% from $52,500 to $58,129. This move flipped the crypto market sentiment to cautiously optimistic, confirmed by Alternative’s Fear & Greed Index’s (FGI) uptick from 22 on September 6 to 31 as of September 12.
Since Bitcoin’s ATH in March 2024, the stablecoin dominance has been climbing higher. While the current outlook is bullish no doubt, investors need to be cautious as the overall trend of BTC is bearish.
Stablecoin dominance is the relative measure of stablecoin market capitalization compared to the total cryptocurrency market capitalization.
Data from Alphractal shows that the decline in stablecoin dominance between June 2023 and early 2024, coincided with the bull run in Bitcoin price. Now that the metric shows an uptick, it could suggest that downtrend has still not ended.
Stablecoin DominanceA spike in stablecoin dominance shows that the market capitalization of stablecoins is rising relative to other cryptocurrencies. This development is indication of a risk-off behavior from investors. If this metric does not trend lower in the coming weeks, there is a good chance the uptrend could be undone.
Bitcoin Price Analysis: BTC Bulls Uncertain
The short-term outlook for BTC price is bullish after the recent rally. However, the six-month downtrend consolidation shows lower highs and lower lows. Once BTC produces a higher high above $65,000, there is a much higher chance of restarting the ongoing bull run.
Unless BTC overcomes the $63,000 to $65,000 resistance zone, the short-term bullish outlook is at most, uncertain.
The Relative Strength Index (RSI) and the Awesome Oscillator (AO) are showing a short-term shift in the momentum favoring bulls. However, unless there is stabilization above their respective mean levels of 50 & 0, the recovery rally thesis is risky.
Over the past six months, all short-term rallies have resulted in a quick sell-off. So, unless BTC sees a sustained spike in buying pressure that prevents a sell-off, it is unlikely the crypto market will flip bullish.
Therefore, the Bitcoin price prediction hints at a cautiously optimistic outlook with bias leaning toward the downside.
BTC/USDT 1-day chartA breakdown of the $54,000 level on the daily time frame will invalidate the short-term bullish thesis. This development could see BTC trickle down to the $52,271 to $50,710 support zone.
The post Here’s Why Stablecoins Threaten Bitcoin Price Rally to $60K appeared first on CoinGape.
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