The USDC inflow is increasing according to on-chain data. Stablecoins are a traditional source of dry powder that has been used to kick off new Bitcoin rallies.
USDC Exchange inflow sharply rose to high values recently
According to a CryptoQuant analyst, nearly one billion USDC flowed in recent months into cryptocurrency exchanges. This could indicate an uptrend in Bitcoin, as per past patterns.
The “USD Coin exchange inflow” is an indicator that measures the total amount of the stablecoin entering wallets of all exchanges within a given period.
This indicator’s value increases means that investors deposit more coins. Most holders will transfer their stablecoins into exchanges in order to convert them into volatile cryptos like Bitcoin. The holders may be able to withdraw their coins in fiat.
When exiting volatile markets, investors use USDC to hold onto their USDC until the prices become favorable for them. High stablecoin exchange flows may indicate that the prices can be re-entered at a favorable price.
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Below is a chart that illustrates the USD Coin Exchange Inflows Trend over the Past Year:
The metric's value has seen a recent surge to record levels. Source: CryptoQuant| Source: CryptoQuant
You can see that USDC has seen an increase in inflows over the last few weeks, as you can see from the graph. This inflow has reached around 1 billion dollars.
Two other occasions were noted in this period that also showed similar results. If you look at the Bitcoin price graph in the same chart it appears that there have been several instances where similar values were observed.
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As many investors hold USDC in order to convert it into BTC, this makes good sense.
It remains to be determined if there will be a similar impact on Bitcoin’s price this time or if the USDC will pump other coins.
Bitcoin Prices
At the time of writing, Bitcoin’s price floats around $39.2k, down 10% in the last seven days. In the past month, crypto lost 11%.
Below is a chart showing the change in coin price over the past five days.
BTC price appears to be dropping again today. Source: BTCUSD at TradingView| Source: BTCUSD on TradingView
Yesterday Bitcoin saw a sharp uptrend, breaking above $42k once more. Today, however, the cryptocurrency appears to be in a downward spiral.
Unsplash.com featured image, Charts from TradingView.com and CryptoQaunt.com charts