The first month after the Bitcoin halving last month has been uneventful. However, this might change soon as CryptoQuant observed a serious spike in the volume of stablecoins entering the market.

Interestingly, there are significant jumps in stablecoin inflows at various points, often corresponding with movements in bitcoins price.

Surge in Liquidity Signals Strong Bullish Trend

Bitcoin witnessed a significant increase in value after the historic approval of US spot exchange-traded funds (ETFs) this year. However, it has been struggling to gain upward momentum since it dropped below its 2021 all-time high of $69,044 in early April. The initial hype over ETFs has diminished, slowing down the cryptocurrencys previously unstoppable climb.

Nevertheless, there are signs of improvements due to increased liquidity in the market, as seen by the recent notable increase in stablecoin inflows.

Such an influx can impact the supply and demand dynamics of bitcoin, potentially leading to increased price volatility, according to the on-chain intelligence platforms findings.

The price of bitcoin has shown multiple fluctuations over time, while the blue area indicates the amount of stablecoins entering the market. Notably, there are significant increases in stablecoin inflows at various points, which often coincide with Bitcoins price movements.

Stablecoins Inflows. Source: CryptoQuant Bitcoin experienced its largest single-day increase in nearly two months this week due to contradicting US economic data, which increased the likelihood of the Federal Reserve joining other countries in easing monetary policy through rate cuts during the summer. As a result, the worlds leading cryptocurrency surged by almost 8% to $66,400, marking its most significant gain since March 20.

Bitcoin Back to New ATH?

Prominent crypto trading firm QCP Capital noted that the bullish momentum turnaround could push BTC towards retesting its previous highs of around $74,000.

It also observed a significant increase in buyers of 100-120k BTC Calls for December 2024, indicating growing confidence in the assets value. Meanwhile, institutional demand for the cryptocurrency remains strong, with major asset managers such as Millenium and Schonfeld allocating approximately 3% and 2% of their assets under management (AUM) into the spot Bitcoin ETF.

These factors paint a bullish picture of BTCs potential breakout.