Bitcoin (BTC) and Tether (USDT) have a really strong correlation and as we have seen in the past, Tether (USDT) printing is followed by aggressive pumps in the price of Bitcoin (BTC). However, the correlation extends beyond that and even gives us important signals as to when the price of Bitcoin (BTC) might be pumping or dumping well before it even happens. If we look at the Tether (USDT) Market Cap chart on the weekly time frame, we can see that it started to fall around October 08, 2018. Interestingly, the price of Bitcoin (BTC) declined crashed a month afterwards on November 12, 2018. So, how did this happen? Well, the way it works is that Tether (USDT) is printed to pump money into Bitcoin (BTC) and other cryptocurrencies.
When retail investors start buying, the printing and pumping slows down until Bitcoin (BTC) finds a local top. Then the whales or market makers move from Tether (USDT) into Bitcoin (BTC). This is exactly what happened between October 08, 2018 and November 12, 2018. During this time, the market cap of Tether (USDT) falls as money flows out of it into Bitcoin (BTC). When the conversion is done, they move from Bitcoin (BTC) into fiat (USD) and the market crashes. When the price bottoms out locally, they start printing Tether (USDT) again which is then used to pump Bitcoin (BTC) and other cryptocurrencies again. Now, October 08, 2018 showed us what was going to happen next before it even happened. We can spot the same thing again which is why it would be a good idea to get out of cryptocurrencies soon as the market cap of Tether (USDT) starts to decline again.
There are two important things to note here. The market cap of Tether (USDT) could easily rise above $3.5 billion in the near future. Meanwhile BTC/USD can also rally towards $10,000 but it is beginning to dawn on most investors that this is not the 2015 styled rally that they have been anticipating. In fact, even some analysts that think that Bitcoin (BTC) is likely to bottom around the end of the year are being a little too optimistic. We need to look at this beyond cryptocurrency charts and understand what is really going on in the world and what it might mean for Bitcoin (BTC) and other cryptocurrencies.
We have seen for the past few months that the United States is itching for trouble. The current administration is constantly looking for ways to create trouble and as we saw recently, they have been successful so far. We now have conflicts with China and Iran that could escalate into something bigger. Japan showed its intent to keep buying Iranian oil and Prime Minister Shinzo Abe also visited Iran a few days back. Interestingly, there was an attack on two oil tankers in the Gulf of Oman and the US has once again blamed it on Iran. It does not take much to see where all of this is going. We are not short of catalysts at the moment to see a stock market crash and when that happens, it is not going to be a good day for Bitcoin (BTC).