Why Crypto Lags While Traditional Markets Hit aths: A Look at Stablecoin Reserves
Key points:
- Bitcoin and Altcoin are lagging behind gold and stocks when it comes to new ancient highs.
- Research suggests that liquidity patterns,specifically traders withdrawing Stablecoin,are partly to blame.
- Historically, traditional risk assets must “cool down” before crypto can experience a surge.
- Bitcoin (BTC) is declining while teh crypto markets are unable to follow the trend of gold and stocks. Is the Bull Market finished?
new research conducted by the On-Chain analysis platform CryptoQuant shares four key reasons why Bitcoin and Altcoin are “in the red”: interest rate cuts by the Fed, Stablecoin reserves, traders using financial leverage, and historical standards.
Crypto is Still at the “End of the Liquidity Pipeline”
Recently, Bitcoin has struggled, as liquidity dynamics prevent notable price increases from challenging historical tops.
At the same time, both gold and US stock markets continue to record repeated all-time highs (ATH), fueling fears that crypto has not yet been able to become a mainstream asset class.
A collaborator at Cryptoquant, Xwin Research Japan, offers a different viewpoint. According to them, crypto is simply repeating historical patterns.
“In the initial phase of rate cuts, institutional capital tends to move first towards high liquidity assets such as stocks and gold,” they wrote in a quicktake blog post, referring to the interest rate cuts by the american Federal Reserve.
“Crypto, particularly altcoins, are at the end of the liquidity pipeline and only benefit when risk appetite increases.”
XWin compared the current configuration of the Bitcoin market and the largest Altcoin Ether (ETH) with that of a year ago, finding significant