Stablecoin Flows Fuel Bitcoin Traders’ High Hopes

Bitcoin (BTC) reached a new all-time high of $70,083 on March 8, although it later experienced a sharp correction. The influx of stablecoins into the market suggests that traders are preparing for higher prices. The increased inflows of tether and USD Coin into crypto exchanges, totaling a 6.5% increase in March, indicate that traders expect Bitcoin to continue its upward trend. Market intelligence firm Glassnode reveals that holdings in known crypto exchange wallets rose from $18.43 billion on March 1 to over $19.63 billion on March 8.

Data from CryptoQuant shows that stablecoin balances on exchanges surged in the first eight days of March, alongside an increase in crypto prices. The total market capitalization of stablecoins also grew by 1.2% to $145.2 billion, with Tether’s USDT accounting for over 70% of this value. The total trading volume of all stablecoins currently stands at around $112.7 billion, with USDT alone contributing $86.65 billion to these volumes.

Historically, the growth of stablecoin inflows and market cap has been seen as an indication of market participants’ positioning. Combined with the positive performance of spot BTC ETFs and the upcoming Bitcoin supply halving, which is around 41 days away, the rise in stablecoin reserves on exchanges continues to accelerate. Similar patterns in stablecoin inflows to exchanges were observed in October 2020, which sparked Bitcoin’s rally.

The increased influx of stablecoins into exchanges is perceived as a catalyst for positive price action in the crypto market, suggesting that available capital is flowing back into digital assets. Notably, medium and large investors are holding their positions despite BTC’s retracement after briefly reaching a high of $69,324 on March 5. This indicates a bullish sentiment among these investors.

Bitcoin is currently trading at $67,863, showing a 0.73% increase over the past 24 hours.