On-chain data shows the stablecoin exchange inflow mean has reached a new all-time high, here’s why this might prove to be bullish for Bitcoin.
The Inflow of Stablecoins into the Exchange has risen to a New ATH.
Inflows of Bitcoin can have a positive effect on Bitcoin’s long-term future, however, they could also be bearish for Bitcoin in the near term.
The “stablecoin exchange inflow mean” is an indicator that measures the average amount of stablecoins per transaction going into the wallets of centralized exchanges.
Stablecoins have a relatively high value due to their tie to fiat currencies. This allows investors to use them to escape the volatility of other coins.
These holders decide that it is right for them to return into volatile markets such as Bitcoin once they feel their holdings are safe. They then convert their stocks into them by using exchanges.
The large volume of coins that move to exchanges could create buying pressure, which can lead to a surge in the price of volatile cryptos.
Below is a chart of the inflow to stablecoins and the Bitcoin prices over the years.
In recent times, the metric's value seems to be quite high. Source: CryptoQuant| Source: CryptoQuant
The graph above shows that the steadycoin inflow average has seen a sharp uptrend over the past weeks and now has reached a new record high.
This means that exchange wallets are currently receiving larger transactions.
The quant also marks the times when a similar trend has been observed in the charts.
As you can see, in the two previous cases high levels of the indicator resulted in Bitcoin reaching its bottom before a subsequent upswing.
However, bullish influences are usually delayed so that BTC can benefit from current highs in the longer term.
Analysts note that volatility could be caused by the trend in stablecoin inflow means in Bitcoin’s short-term, which may have a detrimental effect on it.
At the time of writing, Bitcoin’s price floats around $20.3k, down 2% in the last week. In the last month, crypto gained 6%.
It appears that the cryptocurrency price has been slightly declining in recent days. Source: TradingView, BTCUSD.| Source: BTCUSD on TradingView
Featured image by Traxer, Unsplash.com. Charts from TradingView.com. CryptoQaunt.com.