Bitcoin to remain in consolidation as fiat-to-stablecoin conversions stay muted, analysts warn

Matrixport warns that Stablecoin issuance data indicates a slowdown in the transition from fiat to crypto and that the Federal Reserve’s hawkish bias will likely impact market activity.

According to Singapore-based digital asset firm Matrixport, Bitcoin (BTC) is likely to remain in consolidation as long as fiat-to-stablecoin conversions remain muted.

Matrixport noted in a Jan. 14 research note that the last 7-day stablecoin issuance indicator showed a “significant slowdown” in fiat-to-crypto shifts, especially as the Christmas holiday approaches.

Independent analyst Markus Thielen said the decline could be attributed to the Fed’s hawkish stance in mid-December, which likely weakened investor confidence. Thielen warned that Bitcoin and other cryptocurrencies are expected to continue consolidating as fiat-to-stablecoin conversions are still weak.

Despite the end of the quieter holiday period, stablecoin inflows have yet to show a meaningful recovery. Even after the holiday period ended, stablecoin inflows have yet to show a meaningful recovery. Thielen emphasized that this metric is important because an increase in stablecoin minting “typically indicates increased demand for cryptocurrencies.” However, he admitted that the current increase in printing is modest and its sustainability remains unclear.

Thielen remains cautious and notes that while any increase in coin minting is a good sign, it is not enough to signal a clear path forward for BTC or other cryptocurrencies. For now, the market is likely to remain in a holding pattern until more significant movements in stablecoin inflows emerge.

Meanwhile, spot Bitcoin exchange-traded funds in the US recorded outflows for the third consecutive day this year as Bitcoin fell below $90,000 amid a broader market risk-off sentiment. As Crypto.news reported, 12 spot Bitcoin ETFs recorded net outflows of approximately $285 million on January 13, extending the outflow streak to three days, during which more than $1 billion outflowed from the funds.