Stablecoin Exchange Inflow Mean Hits ATH, Why This Could Be Bullish For Bitcoin
On-chain data shows that the Stablecoin exchange has hit a new all-time high, here’s why this could prove bullish for Bitcoin.
The Stablecoin Exchange Inflow Mean has risen to a new ATH recently
As pointed out by an analyst in a CryptoQuant post, these indications could be positive for Bitcoin in the long term, but could be bearish in the short term.
The “stablecoin exchange inflow average” is an indicator that measures the average amount of stablecoins per transaction entering the wallets of centralized exchanges.
Since stablecoins are relatively stable in value (as the name already implies) due to their peg to fiat currencies, investors in the crypto space use them to escape the volatility associated with most other coins.
When these holders feel the prices are right to return to volatile markets like Bitcoin, they convert their stables to them using exchanges.
Because of this, a large number of these coins moving onto exchanges can provide buying pressure for the volatile cryptos, thereby increasing their prices.
Now, here’s a chart showing the trend in the Stablecoin exchange mean value, as well as the corresponding Bitcoin prices, over the last couple of years:
The value of the metric seems to have been pretty high in recent days | Source: CryptoQuant
As you can see in the graph above, Stablecoin exchange inflows have observed a sharp uptrend in recent weeks, and have now set a new all-time high.
This suggests that the average transaction going into exchange wallets is currently larger than ever.
In the diagram, the quantity has also marked the periods where a similar trend has been seen in the last couple of years.
It appears as in both of the previous cases that high values of the indicator lead to the price of Bitcoin forming a bottom, and then observing a certain rise.
However, the bullish effect has usually been delayed, suggesting that the current highs will only be constructive for BTC in the long term.
The analyst notes that in the short term, this trend in Stablecoin inflows could cause volatility for Bitcoin, thus possibly having a negative effect on it.
Bitcoin price
At the time of writing, Bitcoin’s price is hovering around $20.3k, down 2% in the last week. Over the past month, the crypto has risen 6% in value.
Looks like the price of the crypto has slightly declined in the last few days | Source: BTCUSD on TradingView
Featured image from Traxer on Unsplash.com, charts from TradingView.com, CryptoQaunt.com
