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Thursday, April 22, 2021

Bitcoin Exchanges Just See Massive Tether Stable Coins Deposits

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Almost half a billion Tether entries were recorded on April 8 on major Bitcoin (BTC) exchanges, based on data from Glassnode.

Considering that the entries, the largest since mid-March, coincided with a slight pullback in Bitcoin, this indicates that buyers may be waiting to intervene after the BTC prices drop.

Stablecoin deposits in exchanges. Source: Glassnode

Is a wider Bitcoin rally brewing?

There are two major on-chain metrics that often signal the formation of a bigger Bitcoin rally: BTC exits and stable coin entries.

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Stable inflows of coins occur when traders deposit their marginalized funds on exchanges to redeem cryptocurrencies.

Meanwhile, large BTC outflows typically occur when wealthy investors withdraw their Bitcoin from stock exchanges to self-hosted wallets, often suggesting their intention to hold it for the long term.

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Within an hour, more than $ 476 million of stable deposits were spotted on the exchanges. According to Lex Moskovoski, the CIO of Moskovoski Capital, this demonstrates that there is no shortage of capital to buy Bitcoin dips.

Moskovsky said:

“$ 476 million USDT deposited on the exchanges in an hour yesterday to buy the downside. Every time we dive there is no shortage of cash on the sidelines, it seems.”

Stable coins are experiencing massive growth

On April 2, Bitfinex CTO Paolo Ardoino said the market capitalization of Tether, the world’s largest stablecoin, had reached $ 42 billion in market capitalization.

Over the next six days, Tether’s market cap (USDT) added another $ 2 billion, showing strong momentum.

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Since Tethers are essentially digital dollars that can be easily converted into Bitcoin and other cryptocurrencies, this upward trend suggests that the amount of marginalized capital in the crypto market is increasing.

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Theoretically, when there is a lot of liquidity in the market, this represents significant firepower to drive a new rally in major cryptocurrencies like Bitcoin.

When request While large USDT deposits could also mean there was a withdrawal request instead, Moskovsky countered by saying that USDT deposited on the exchanges generally represented buying intent.

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It Explain:

“Stable coins deposited on exchanges are primarily for buying. Some can be used to lend to leveraged traders. […]. Besides, it is also bullish as it highlights the demand for longs. “

Meanwhile, CryptoQuant data illustrates a similar trend. The ratio of All Stable Coin Exchanges (ESRs), for example, which divides all Bitcoin reserves on the exchanges by stable coin reserves, is rising again, suggesting that investors may re-enter the market.

Stablecoins Ratio. Source: CryptoQuant