Key Points
- Bitcoin has broken above $65,000, with analysts predicting a swift move to $70,000 and new all-time highs, driven by $10 billion in recent stablecoin minting and potential capital inflows from China’s $278 billion stimulus plan.
- Altcoins are experiencing a resurgence, with some seeing gains of over 50%, as Bitcoin dominance wanes and retail trading activity in South Korea intensifies, particularly in tokens like Shiba Inu.
According to a recent research report by 10x Research, the cryptocurrency market is on the cusp of a significant rally, fueled by a combination of macroeconomic factors and market dynamics.
Stablecoin Surge Signals Institutional Interest
The cryptocurrency market is witnessing a significant liquidity boost as stablecoin minting reached nearly $10 billion in recent weeks. This influx, which surpasses Bitcoin ETF flows, comes on the heels of the Federal Reserve’s September rate cut decision. Circle’s USDC, typically associated with more regulated institutions, accounted for 40% of these inflows, suggesting increased allocation from larger market players.
The total value of outstanding stablecoins has now reached $160 billion, with year-to-date inflows of $35 billion. This surge in stablecoin issuance is seen as a precursor to increased DeFi activity and broader crypto market participation.
Chinese Stimulus and OTC Trading: A Potential Catalyst
Analysts at 10x Research are closely watching the potential impact of China’s recently announced $278 billion stimulus plan on the crypto market. Chinese over-the-counter (OTC) cryptocurrency brokers have reported consistent quarterly inflows of around $20 billion for the past six quarters, totaling approximately $120 billion.
With 55% of currently mined Bitcoins coming from Chinese mining pools, the combination of Chinese stimulus and the Fed’s rate cuts could trigger significant capital outflows into the cryptocurrency market. This scenario draws parallels to 2013 when Chinese exporters used over-invoicing to funnel billions into Bitcoin, sparking a massive rally.
Altcoin FOMO and Retail Trading Surge
As Bitcoin breaks out of its downtrend, altcoins are experiencing a renaissance. Ethereum has surged 11% since the Fed’s September rate cut, while some altcoins like ENA and SEI have seen gains exceeding 50%. This shift is reflected in Bitcoin’s waning dominance and a spike in Ethereum gas fees, indicating increased altcoin activity across the ecosystem.
Retail crypto trading in South Korea has picked up, with daily volumes around $2 billion. While still below the peak seen in early 2024, altcoins have dominated recent trading, surpassing Bitcoin. Shiba Inu, in particular, has reclaimed the top spot in trading volume in South Korea, signaling rising speculation and setting the stage for a potential Q4 rally.
As Bitcoin’s volatility remains low and funding rates in perpetual futures markets stay negative or near zero, 10x Research suggests that conditions are ripe for institutional traders to take on larger positions. With FOMO (Fear of Missing Out) returning to the altcoin market and Bitcoin breaking key resistance levels, the cryptocurrency space appears poised for a significant upward movement in the coming weeks.
The research by 10x Research highlights the convergence of multiple factors that could drive the next wave in the crypto market, emphasizing the potential for both Bitcoin and altcoins to see substantial gains in the near term.
