On March 8, the price of Bitcoin (BTC) reached a record high of $70,083. Despite a sharp correction, data on stablecoins suggests that traders are anticipating even higher prices.
There has been a noticeable increase in the inflow of stablecoins, coinciding with renewed activity in the cryptocurrency market, particularly with the launch of spot Bitcoin (BTC) exchange-traded funds in the United States.
The amount of tether (USDT) and USD Coin (USDC) deposited into crypto exchanges has risen by 6.5% in March, indicating that traders are preparing to purchase more cryptocurrency in anticipation of a continued uptrend in Bitcoin.
According to market intelligence firm Glassnode, the total holdings in known crypto exchange wallets have increased from $18.43 billion on March 1 to over $19.63 billion on March 8.
Additional data from market data provider CryptoQuant reveals that as stablecoin balances on crypto exchanges have surged in the first eight days of March, the number of stablecoin deposit transactions has also increased in tandem with rising crypto prices.
Meanwhile, the total market capitalization of stablecoins has grown by 1.2% in March, reaching $145.2 billion at the time of publication, according to DefiLlama. Tether’s USDT accounts for more than 70% of this value, with a market cap of $101.2 billion.
The combined trading volume of all stablecoins currently stands at approximately $112.7 billion, with USDT alone accounting for $86.65 billion of these volumes.
The rise in stablecoin inflows to exchanges and market capitalization has historically been considered a positive indicator of the market’s overall sentiment.
Fueled by the impressive performance of spot BTC ETFs and the upcoming Bitcoin supply halving – which is only 41 days away – the reserves of stablecoins on exchanges continue to grow.
As previously reported by Cointelegraph, the increase in stablecoin inflows to exchanges was a key factor in the start of Bitcoin’s rally in October 2020.
Is the crypto market seeing a surge in stablecoin inflows?
The rise in stablecoin inflows to exchanges is often seen as a positive sign for the crypto market, indicating that investors are moving capital back into digital assets.
According to Bitcoin Munger, a user on X social network, the market cap of stablecoins has been growing alongside the price of BTC.
Market data tracking firm Santiment’s analysts have noticed that despite BTC’s recent drop after reaching a high of $69,324 on March 5, medium and large investors are holding strong. Meanwhile, the number of non-zero BTC wallets has decreased, primarily due to smaller traders giving in to market pressure. This combination is generally seen as a bullish sign.
As of now, BTC is trading at $67,863, with a 0.73% increase in the last 24 hours, according to CoinMarketCap’s data.
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