USDC Inflow Spikes Up, Will It Act As Dry Powder For New Bitcoin Rally?
March 10 2022 - 2:00PM
NEWSBTC
On-chain data shows the USDC exchange inflow has spiked up.
Historically, stablecoins have provided dry powder for kicking off
new Bitcoin rallies. USDC Exchange Inflow Sharply Rose To High
Values Recently As explained by an analyst in a CryptoQuant post,
almost one billion USDC has flowed into exchanges recently. Past
pattern suggests this may lead to uptrend for Bitcoin. 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. When the value of this indicator moves up, it means
investors are depositing a higher amount of coins at the moment.
Usually, holders transfer stablecoins to exchanges for converting
them into a volatile crypto, like Bitcoin. They may also withdraw
the coins to fiat. Investors use stablecoins like USDC when they
want to exit volatile markets and hold on until prices are
favorable enough for re-entering them. This implies that high
stablecoin exchange inflows may show that prices are once again
good for re-entry. Related Reading | Bitcoin Trading Volume
Has Now Stabilized At High Values, But For How Long? Now, here is a
chart that shows the trend in the USD Coin exchange inflows over
the past year: Looks like the value of the metric has surged up to
high values recently | Source: CryptoQuant As you can see in the
above graph, the USDC inflow has spiked up over the past few weeks.
These inflows have amounted to around 1 billion coins. There were
two other instances earlier during the period where similar values
were also observed. Looking at the Bitcoin price curve in the same
chart, it seems like some time following such large spikes in the
indicator, the value of the crypto has always surged up as well.
Related Reading | Bitcoin Exchange Reserve Has Now Reached An
Equilibrium After 2 Years Of Downtrend This makes sense as many
investors deposit the USDC for converting to BTC, so such inflows
provide for a fresh supply of dry powder for sustaining a rally.
Now it remains to be seen whether a similar effect on the price of
Bitcoin will also be there this time, or if this USDC inflow will
pump some other coins instead. Bitcoin Price At the time of
writing, Bitcoin’s price floats around $39.2k, down 10% in the last
seven days. Over the past month, the crypto has lost 11% in value.
The below chart shows the trend in the price of the coin over the
last five days. BTC's price seems to have dropped down once again
today | Source: BTCUSD on TradingView Yesterday, Bitcoin showed
some sharp uptrend and broke above the $42k level again. However,
today the coin looks to have plunged down once more. Featured image
from Unsplash.com, charts from TradingView.com, CryptoQaunt.com
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