Bitcoin (BTC) has rebounded sharply from the recent drop that saw prices drop below $50,000, approaching $60,000 again.
Bitcoin Prospects Strengthen as Key Stablecoin Metric Hits 18-Month Low
This recovery could indicate a sustained bullish trend, supported by a key metric that suggests that selling pressure is abating in the Bitcoin market.
The “stablecoin exchange rate,” which compares the amount of BTC held in wallets associated with centralized exchanges to stablecoins, has reached its lowest level since February 2023.
According to data from blockchain analytics firm CryptoQuant, this rate has been on a downward trend since June of last year.
“This decline could indicate that selling pressure on Bitcoin is easing as fewer investors are converting their BTC into stablecoins. Furthermore, it could also indicate a bullish market sentiment as investors hold on to their BTC in anticipation of future price increases,” CryptoQuant said.
Stablecoins, such as Tether (USDT) and USD Coin (USDC), are cryptocurrencies pegged to external references, such as the US dollar. They are often used to avoid price fluctuations of other cryptocurrencies and facilitate trading activities.
The combined supply of these top stablecoins has increased by nearly $2 billion to $150.15 billion since the market crash on August 5. On a year-over-year basis, their combined supply is up nearly 30%, indicating continued fiat inflow into the market.
This trend also coincides with analysts’ positive outlook. “Spot ETFs experienced positive net flows on Monday,” Valentin Fournier, an analyst at digital assets research firm BRN, told Reuters.
“Bitcoin (+$28M) and Ethereum (+$5M) received institutional support after the weekend decline. This resilience in times of market fear could help reduce Bitcoin’s volatility in the long run,” he said.
*This is not investment advice.
