On-chain data shows that stablecoin exchange flows have seen a sharp decline recently. This could be bearish for the price of Bitcoin.
Ethereum-based stablecoins have recently seen low exchange deposits
As CryptoQuant author Axel Adler Jr. pointed out in an article job on X, exchange flows of Ethereum-based stablecoins have recently fallen below the 90-day average.
THE “foreign exchange influx“here refers to an on-chain indicator that tracks the total amount of a given cryptocurrency transferred to wallets associated with centralized exchanges.
When the value of this metric is high, investors now deposit large amounts of assets on these platforms. Typically, holders send their coins to exchanges for trading purposes, so this trend may show high demand for cryptocurrency trading.
The implications of foreign exchange flows for the broader market, however, depend on the type of asset in question. For volatile assets like Bitcoin, capital inflows can have a direct downward effect on their prices because they imply that a sell-off is underway.
BTC, in particular, serves as a major gateway for capital flowing into and out of the digital asset sector, so its sale can have cascading effects on altcoin prices.
Sale stable coins does not affect their prices because their value is, by nature, “stable” at $1. Trading flows for these securities, however, remain important to the market, as they suggest that stable holders are looking to trade.
If investors invest to exit the fiat sector, the market as a whole will experience a bearish effect, as this implies that a net amount of capital is leaving the sector.
In case deposits are made to purchase Bitcoin and other volatile coins, the prices of these assets would register a bullish effect.
The latter case may be more likely whenever large stablecoin trading flows take place, as, in general, investors interested in the sector store their capital in the safety of these fiat currency-linked tokens, waiting for the right opportunity to buy on the volatile side.
Now here is a chart that shows what the trading inflow trend looks like for all Ethereum-based stablecoins:
The value of the metric appears to have been sharply going down in recent days | Source: @AxelAdlerJr on X
As seen in the chart above, the 7-day moving average (MA) of stablecoin exchange inflow has recently declined sharply and fallen below the 90-day MA.
This suggests that stablecoin users have much less demand for purchasing Bitcoin and others today than during the rally that led to BTC. new absolute record. “The drop in volumes below the quarterly figure is a negative signal,” notes the analyst.
BTC Price
Bitcoin attempted another recovery push over the past day and its price has now returned above the $63,000 mark.
Looks like the price of the asset has been trying to start another rally | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, CryptoQuant.com, chart from TradingView.com