Bitcoin’s Future Brightens as Major Stablecoin Indicator Hits 18-Month Low
Bitcoin (BTC) has swiftly bounced back to nearly $60,000 following a recent downturn that briefly saw prices dip below $50,000. This resurgence in price may have lasting power, as indicated by the decreasing “exchange stablecoins ratio,” a metric that gauges the amount of BTC held in wallets linked to centralized exchanges in relation to stablecoins, signaling a decrease in selling pressure.
The “exchange stablecoins ratio” has reached its lowest point since February 2023, continuing a downward trend that commenced in June of the previous year, according to data compiled by blockchain analytics company CryptoQuant. This decline in the ratio suggests a potential reduction in BTC being converted into stablecoins by traders, potentially reflecting a positive market sentiment where traders are holding onto BTC in anticipation of future price hikes.
Stablecoins are digital currencies pegged to external references like the U.S. dollar, providing a means for investors to navigate the price volatility commonly associated with other cryptocurrencies. They are frequently used to facilitate spot crypto acquisitions and derivatives trading.
The combined supply of the two leading stablecoins by market value, tether (USDT) and USD Coin (USDC), has surged by around $2 billion to $150.15 billion post the market crash on August 5, as per data from charting platform TradingView. On a year-over-year basis, the collective supply of USDT and USDC has grown by nearly 30%, indicating a sustained influx of fiat into the market, possibly from investors seeking to purchase BTC at discounted prices.
This trend aligns with the optimistic outlook shared by some analysts. Valentin Fournier, an analyst at digital assets research firm BRN, highlighted positive net flows into spot ETFs on Monday, with institutional support for BTC and ETH following the weekend decline. Fournier noted that this resilience during challenging times could potentially contribute to decreasing Bitcoin’s volatility in the long run.
Fournier further remarked that the current momentum, though modest, remains positive, with Bitcoin edging closer to the upper end of its range between $67,000 and $69,000 in the upcoming weeks. These developments suggest a potentially bullish trajectory for Bitcoin in the near future.
