Amid Bitcoin‘s (BTC) rally to around $57,000, key stablecoin movements are emerging in the market.
Stablecoin reserves on exchanges have increased rapidly since August, as shown by the purple line in the chart below. This is due to increasing balances in tether (USDT), while other niche coins such as USDC and BUSD have seen a decline.
Stablecoin reserves on exchanges. Source: CryptoQuant.
“This is a noteworthy change,” says one analysis. shared by on-chain data provider CryptoQuant, made by the trader known as Yonsei_dent. The reason for this is that indicates a bullish signal for the bitcoin market and cryptocurrencies.
“When stablecoins flow into exchanges and increase their holdings, it is generally interpreted as funds waiting to be bought, which will have a positive effect on the price,” the report explains.
In other words, investors often hold stablecoins to steer clear of downward market volatility until there is a better outlook. Therefore, their increased balances in exchangestends to reflect an improvement in sentiment and will likely be exchanged for volatile assets such as bitcoinso they could react upwards.
The stablecoins —as explained in Criptopedia, the educational section of CriptoNoticias— are crypto assets that maintain the same price as fiat currencies, mainly the US dollar (USD). The one with the highest capitalization is tether (USDT), so its movements act as a key market indicator.
Risk aversion in the bitcoin market must be mitigated
While the increase in USDT holdings on exchanges does not necessarily mean that Bitcoin will immediately rise in price, the analyst anticipates that this could happen. In this sense, it is crucial that the context motivates investors to buy this asset.
“Since these are ‘funds on hold,’ it is important to note that if the market trend is unclear or the global economy is difficult, there may not be any buying due to risk aversion,” says the analysis reported by CryptoQuant.
As reported by CriptoNoticias, the debate that the presidential candidates of the United States will have today and weekly employment data in the North American financial power could bring market volatility. The latter is due to the fact that will give signs on the depth of cuts of interest rates to be established by the Federal Reserve (Fed), the US central bank.
Meanwhile, the Bitcoin and Cryptocurrency market remains in a state of fear, as the price persists in a corrective sideways period six months ago. Although, This feeling has decreased with the rise of bitcoin from USD 52,000 to USD 57,000, showing an improvement.
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