Bitcoin is expected to remain in a consolidation phase as long as conversions from fiat to stablecoins remain subdued, according to Matrixport, a digital asset firm based in Singapore.
Matrixport highlighted a “significant slowdown” in fiat-to-crypto on-ramps in a research note shared via an X post. This was primarily reflected in the latest 7-day stablecoin minting indicator, which showed decreased activity leading into the Christmas holidays.
Independent analyst Markus Thielen attributed the recent dip in the cryptocurrency market to the Federal Reserve’s hawkish stance in mid-December, which likely affected investor sentiment. He warned that Bitcoin and other cryptocurrencies are expected to continue consolidating, with conversions from fiat to stablecoins remaining low.
Although the holiday season has ended, stablecoin inflows have not yet shown significant recovery. Thielen highlighted the importance of this metric, noting that an increase in stablecoin minting typically indicates a growing demand for cryptocurrencies. However, he pointed out that the current rise in minting is modest, and its long-term sustainability is uncertain.
Thielen remains cautious, acknowledging that while any increase in minting is a positive sign, it is insufficient to suggest a clear direction for Bitcoin or other cryptocurrencies. He suggests that the market will likely remain in a holding pattern until more substantial stablecoin inflows are observed.
In a broader market analysis, Bybit highlights divergent trends in Bitcoin and Ethereum’s options markets. After December’s options expirations, Bitcoin’s open interest was rebalancing, while demand for Ethereum call options increased. Bitcoin’s implied volatility is at 57%, suggesting heightened risk expectations. The report indicates that Bitcoin’s decline from the $100,000 mark may be due to macroeconomic uncertainty and changing investor sentiment surrounding Donald Trump’s inauguration. Additionally, Bitcoin’s perpetual swap open interest remained steady, with traders maintaining a neutral call-put balance and avoiding substantial leverage, reflecting cautious market sentiment and subdued activity compared to early December 2024.
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