Amid Bitcoin’s (BTC) rally to around $57,000, key stablecoin movements are emerging in the market.
Stablecoin reserves on exchanges have increased rapidly since August, as shown by the purple line in the chart below. This is due to increasing balances in tether (USDT), while other niche coins such as USDC and BUSD have seen a decline.
“This is a noteworthy change,” says one analysis. shared by on-chain data provider CryptoQuant, made by the trader known as Yonsei_dent. The reason for this is that indicates a bullish signal for the bitcoin market and cryptocurrencies.
“When stablecoins flow into exchanges and increase their holdings, it is generally interpreted as funds waiting to be bought, which will have a positive effect on the price,” the report explains.
In other words, investors tend to hold stablecoins to steer clear of downward market volatility until a better outlook comes along. As such, their increased exchange balances tend to reflect improved sentiment and they will likely be exchanged for volatile assets like Bitcoin, so they could react upwards.
Stablecoins —as explained in Criptopedia, the educational section of CriptoNoticias— are cryptoassets that maintain the same price as fiat currencies, mainly the US dollar (USD). The one with the largest capitalization is tether (USDT), so its movements function as a key market indicator.
Risk aversion in the bitcoin market must be mitigated
While the increase in USDT holdings on exchanges does not necessarily mean that Bitcoin will immediately rise in price, the analyst anticipates that this could happen. In this sense, it is crucial that the context motivates investors to buy this asset.
“Since these are ‘funds on hold,’ it is important to note that if the market trend is unclear or the global economy is difficult, there may be no buying due to risk aversion,” says the analysis reported by CryptoQuant.
As reported by CriptoNoticias, the debate that the US presidential candidates will have today and weekly employment data in the North American financial power could bring market volatility. The latter is due to the fact that they will give signals about the depth of interest rate cuts that the Federal Reserve (Fed), the US central bank, will establish.
Meanwhile, the Bitcoin and cryptocurrency market remains in a state of fear, as the price persists in a corrective sideways period six months ago. Although, This sentiment has diminished with the rise of bitcoin from USD 52,000 to USD 57,000, showing an improvement.
