Bitcoin forecast improves as USDT market capitalization grows and indicators reach oversold levels.

The forecast for Bitcoin (BTC) is showing signs of improvement as stablecoin liquidity rises and essential market indicators suggest a potential reversal of the ongoing significant correction.

CryptoQuant emphasized a notable increase in the market capitalization of Tether USD (USDT), which typically leads to higher Bitcoin prices.

USDT’s market capitalization has increased by $5.75 billion over the last 60 days, surpassing its 60-day simple moving average of $3.46 billion. Historically, this trend indicates new capital entering the crypto market, which could support price momentum.

Additionally, on-chain data reveals that the overall stablecoin market cap has risen even further in the past 60 days, jumping from $203.9 billion to $226.1 billion as of March 13. This represents an 11% increase.

However, the liquidity influx is not resulting in any short-term recoveries. The crypto market cap has decreased by 3.2% over the last 24 hours, now at $2.72 trillion. Meanwhile, BTC has dropped by 3.3% during the same timeframe, trading at $80,411.98.

Oversold territory

Simultaneously, on-chain data indicates that Bitcoin has entered an oversold territory following a period of significant correction.

CryptoQuant Korean community manager Crypto Dan noted that the percentage of Bitcoin holdings for less than one month surged in March and December 2024, reaching 23% and 24.5%, respectively.

This trend preceded a correction, bringing the Market Value to Realized Value (MVRV) ratio to 1.8, close to the 2024 correction’s low of 1.71. Should Bitcoin decline to the $70,000 range, the MVRV ratio would exceed levels observed during previous correction lows.

Nonetheless, market sentiment has significantly weakened, with altcoins giving up much of the gains made over the past year. This suggests that further declines may not be necessary to reset the market, as it has already experienced considerable deleveraging.

Entering an oversold zone typically raises the likelihood of a rebound, although market conditions remain challenging.

The final phase of an upward cycle often involves increased risk and investment difficulty, but as selling pressure lessens, the chances of a price recovery improve.

Crypto Dan highlighted the strength and scale of any potential rebound, whale activities, and changes in on-chain data as crucial factors to monitor in the upcoming period. Furthermore, correlations with traditional stock markets and macroeconomic trends will influence Bitcoin’s path.

Finally, he assessed that it is still premature to determine that the market has entered a full-blown bear cycle.

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