Bitcoin traders anticipate new highs, according to stablecoin flows to exchanges


On March 8, Bitcoin (BTC) price hit a new all-time high at $70,083, and even though the price corrected sharply after hitting a new high, stablecoin data suggests that traders are preparing for higher prices.

There is an uptick in stablecoin inflows with renewed price action in the crypto market, driven by spot Bitcoin (BTC) exchange-traded funds in the United States.

The balances of tether (USDT) and USD Coin (USDC) deposited into crypto exchanges have increased by 6.5% in March, suggesting that traders are preparing to buy more crypto as they expect Bitcoin to resume its uptrend.

Data from market intelligence firm Glassnode shows that holdings in known crypto exchange wallets rose from $18.43 billion on March 1 to surpass $19.63 billion on March 8.

Stablecoin balance on exchanges. Source: Glassnode

Additional data from market data provider CryptoQuant reveals that while stablecoin balances on crypto exchanges spiked during the first eight days of March, the number of stablecoin deposit transactions also grew in tandem with crypto prices.

All stablecoins deposit transactions to exchanges. Source: CryptoQuant

In the meantime, the total stablecoin market capitalization grew by 1.2% in March to $145.2 billion at the time of publication, according to data from DefiLlama. Tether’s USDT accounts for more than 70% of this value, with a market cap of $101.2 billion.

Total stablecoin market capitalization. Source: DefiLlama

The total trading volume of all stablecoins now stands at around $112.7 billion, with USDT alone making up $86.65 billion billion of these volumes.

The growth of stablecoin inflows to exchanges and market cap have historically been considered good indicators for determining market participants’ positioning.

Accelerated by the amazing performance of the spot BTC ETFs and the upcoming Bitcoin supply halving – which is roughly 41 days away – stablecoin reserves on exchanges continue to increase.

As previously reported by Cointelegraph, growing stablecoin inflows to exchanges kickstarted Bitcoin’s rally in October 2020.

Related: Bitcoin just hit a record in open interest — expect imminent volatility

Are Bitcoin traders capitulating?

Increasing stablecoin inflows to exchanges is often viewed as a catalyst for positive price action in the crypto market, indicating that available capital is moving back into digital assets.

According to X social network user Bitcoin Munger, stablecoin market cap grew in tandem with the growth in the price of BTC.

Aggregate stablecoin market cap vs. BTC price. Source: Bitcoin Munger/X

Analysts at market data tracking firm Santiment observed that medium and large investors are staying put even after BTC’s retrace after briefly hitting a high of $69,324 on March 5.

“# Bitcoin’s sharks and whales aren’t going anywhere after the post-#AllTimeHigh volatility rocked markets. At the same time, overall, the number of non-0 $BTC wallets is declining, mainly due to small traders capitulating. Generally, this is a #bullish combination. ”

BTC wallets by number of coins held. Source: Santiment

At the time of writing, Bitcoin is trading at $67,863, up 0.73% over the last 24 hours, according to data from CoinMarketCap.