Crypto Market Sees $3.65 Billion Liquidity Injection, But Where’s the Buying Pressure?

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It seems that you are referring to the concept of “Hodl” from the world of finance, which stands for “Hold On For Dear Life.” In the context of cryptocurrencies, “Hodl” is an acronym for “Hold On For Dear Life,” representing a strategy to hold onto a crypto asset for as long as possible.

In simpler terms, the cryptocurrency market has been experiencing a significant increase in volume, but its influence on the overall market remains relatively minimal

Based on findings from an analysis conducted by CryptoQuant’s Cauê Oliveira, approximately $3.65 billion worth of funds have entered the market via the stablecoin USDT during the past month

Crypto Market Sees $3.65 Billion Liquidity Injection, But Where’s the Buying Pressure?

Liquidity Surges, But Market Isn’t Impacted

In simple terms, this surge in liquidity, as explained by Oliveira, indicates new capital is flowing into the cryptocurrency market, possibly paving the way for upcoming price changes

Regardless of the ongoing inflow of funds into the market, it’s intriguing to ponder about the actual impact this liquidity will exert when fully realized

In simple and clear language: The global cryptomarket has surpassed the $2 trillion mark, with a decrease of approximately 4.8% from yesterday’s value, now standing at around $1.94 trillion

Crypto Market Sees $3.65 Billion Liquidity Injection, But Where’s the Buying Pressure?

Here’s one way to rephrase your sentence in a more conversational and easily understandable manner:

In the realm of modern finance, a new form of utility token (USDT) is proposed to be issued, with assets derived from conventional financial systems serving as collateral for issuance, signifying that substantial portions of this fresh liquidity are anchored in the burgeoning crypto market

As the amount of stablecoins being held increases, it indicates a growing interest in digital assets. However, Oliveira pointed out that most of this capital is still sitting idly on the sidelines

Based on the analysis, these funds are not intended for immediate purchases, but they hold substantial “potential” that can be harnessed at any time

When Will The Market Feel It?

In light of the recent trends in the cryptocurrency market, it’s worth pondering: why isn’t this capital being invested promptly? A plausible theory proposed by CryptoQuant analysts is that institutional investors might be gradually and carefully entering the market, employing strategies to limit immediate impact on price volatility

The analyst explained :

There’s a chance that large financial institutions could be acquiring digital assets using Time-Weighted Average Price (TWAP) orders or automated strategies, which help minimize immediate fluctuations in the asset’s value

In various settings, institutions often employ strategies such as Time-Averaged Price Orders (TAPO) or automated methods, which allow them to distribute big transactions slowly over time instead of abruptly increasing prices by heavy purchasing

As a researcher studying investment strategies, I’ve found that this approach allows me to gradually build my positions in the market without causing significant price fluctuations. It’s particularly effective due to the substantial institutional interest that has fueled the growth of the cryptocurrency market, especially during the bull run of 202

Major entities like hedge funds, investment firms, and conventional banking systems have shown interest in cryptocurrencies, yet they strive to prevent significant, abrupt price fluctuations

Consequently, as more capital flows into the crypto market, it might be some time before we see the complete impact reflected as price rises for prominent digital currencies such as Bitcoin and Ethereum

Featured image created with DALL-E, Chart from TradingView

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2024-09-05 16:12