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Bitcoin Exchanges Saw Huge Tether Stablecoin Deposits


www.cryptovibes.com 08 April 2021 20:26, UTC
Reading time: ~3 m

Almost half a billion in Tether inflows was recorded on April 8 across most of the major Bitcoin (BTC) exchanges, according to Glassnode’s data. Since the inflow is the biggest since mid-March coincided with the minor BTC pullback, it indicates that buyers might be waiting to step in after BTC’s price drop. Many now wonder, is a major rally forming for BTC as sidelined capital makes its way onto crypto exchanges?

Stablecoin deposits into exchanges. Source: Glassnode
Stablecoin deposits into exchanges. Source: Glassnode

Is A Major Bitcoin Rally Brewing?

Two major on-chain metrics often signal that a huge bitcoin rally might be forming: stablecoin inflows and bitcoin outflows. Stablecoin inflows happen when traders deposit their sidelined funds on crypto exchanges to buy back into cryptos.

In the meantime, big bitcoin outflows normally happen when the high-net-worth investors withdraw their BTC from the exchanges to self-hosted wallets. This means that the investors intend to hold their bitcoin for the long term.

Within just one hour, over $476 million worth of stablecoin deposits were seen on exchanges. Based on a statement by the CIO of Moskovoski Capital, Lex Moskovoski, it demonstrates that there is no shortage of capital waiting to buy the bitcoin dips.

Moskovski stated:

“$476M USDT deposited to exchanges in an hour yesterday to buy the dip. Every time we dip, there is no shortage of the cash on sidelines, it seems.”

Stablecoins See Massive Growth

Bitfinex CTO Paolo Ardoino published on April 2 that the market cap of Tether has surpassed $42 billion in market capitalization. Tether (USDT) is the biggest stablecoin in the global market.

. @Tether_to $USDt 42B

— Paolo Ardoino (@paoloardoino) April 2, 2021

In the next 6 days, the USDT market cap added another $2 billion which represents strong momentum. Since Tethers are theoretically digital dollars that can be easily and readily changed into  BTC and other cryptos, the uptrend indicates that the amount of the sidelined capital in the crypto space is growing considerably.

Theoretically speaking, when there is a lot of cash sidelined in the market, it represents considerable firepower to push a new rally of major cryptos like BTC. When asked whether huge Tether deposits may also mean that there is a demand to cash out instead, Moskovski countered by saying that USDT deposited to crypto exchanges normally represents an intention to buy cryptos.

He explained:

“Stable coins deposited on exchanges is for buying, mostly. Some part of it may be used for lending to leveraged traders […]. Besides, it’s bullish too as it highlights the demand for longs.”

Stablecoins ratio. Source: CryptoQuant
Stablecoins ratio. Source: CryptoQuant

In the meantime, data acquired from CryptoQuant represents a similar trend. For example, the All Exchanges Stablecoins Ratio (ESR), which divides all BTC reserves on exchanges by stablecoin reserves, is rising once more, indicating that investors may be re-entering the market.

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