As the crypto market crash continued on Thursday, analysts told Cryptonews.com that traders should keep a close eye on the bitcoin (BTC) price on Coinbase, as well as tether’s (USDT) progress towards getting back to its dollar peg, for clues about when the worst selling pressure might end.
“If [USDT] restores its peg that is a very positive sign for the market,” Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, told Cryptonews.com.
He added that fears around whether or not USDT would be able to maintain its peg has likely contributed to the selling pressure seen over the past 24 hours,” given how important tether is to the entire crypto ecosystem.
At the time of writing (14:34 UTC), tether still remained slightly below its USD 1 peg, trading at around USD 0.993 on Coinbase. The price nonetheless marked a strong recovery from earlier today, when the stablecoin fell to as low as USD 0.91 on some exchanges, as a market panic put the peg under pressure.
“Tether is being sold off due to extreme panic after the UST collapse,” Sotiriou said, explaining that some investors are concerned that Tether does not have the reserves to back up its stablecoin 1:1 with the US dollar.
Still, the analyst stressed that people underestimate the backing Tether has for its stablecoin, and said it is likely that the USDT peg will be fully restored “in the coming days.”
Look for Coinbase premiums
Aside from the USDT peg, Sotiriou suggested traders looking for a price bottom could study the spot price of BTC on Coinbase versus on other major exchanges like Binance.
“[…] if the Coinbase BTC spot price manages to overtake the Binance BTC spot price (as it is currently at a discount) that would also be a positive sign for the market,” Sotiriou said.
Such a shift would suggest that institutions, who generally favor Coinbase over Binance, are buying more bitcoin than retail investors, a sign that professional investors are becoming more confident in the market, Sotiriou said.
BTC has been ‘relatively strong’
Meanwhile, Ben Caselin, Head of Research & Strategy at crypto exchange AAX, said that bitcoin has been “relatively strong” compared to most altcoins during the latest selloff, and that fundamentals such as the number of bitcoin addresses holding at least 0.1 BTC has risen.
Caselin went on to say that it is during events like these that institutions can “observe just how liquid bitcoin is and performs during a crisis.” As a result, we can expect more investors to channel capital to bitcoin, the AAX analyst predicted.
Lastly, Caselin said that as a result of the collapse of UST and the Terra (LUNA) network more broadly, a “big shift in dominance in favor of both bitcoin and ethereum” is possible.
The events over the past days could thus lead to “a renewed focus in the market on quality, decentralized networks over frivolous coins and risky experiments,” the analyst said, adding that this could be “incredibly bullish for the one asset that started it all, bitcoin.”
At 14:34 UTC, BTC stood at USD 28,750, down almost 8% for the past 24 hours and down 28% for the past 7 days. At the same time, ETH traded at USD 1,961, down 16% for the day and down 33% for the week.
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