Bitcoin Achieves New All-Time High as Stablecoin Inflows Increase
On March 8, the price of Bitcoin (BTC) reached a record-breaking high of $70,083. Despite a subsequent correction, data on stablecoin activity suggests that traders are anticipating further price increases.
The surge in stablecoin inflows is attributed to renewed price action in the cryptocurrency market, driven by spot Bitcoin exchange-traded funds in the United States. The deposits of tether (USDT) and USD Coin (USDC) into crypto exchanges have risen by 6.5% in March, indicating that traders are preparing to purchase more crypto in anticipation of Bitcoin’s upward trend.
Data from market intelligence firm Glassnode reveals that holdings in known crypto exchange wallets have increased from $18.43 billion on March 1 to surpass $19.63 billion on March 8.
Additional data from market data provider CryptoQuant shows that stablecoin balances on crypto exchanges have spiked in the first eight days of March, accompanied by an increase in stablecoin deposit transactions aligned with crypto prices.
Meanwhile, the total market capitalization of stablecoins has grown by 1.2% in March, reaching $145.2 billion at the time of publication, as reported by DefiLlama. Tether’s USDT accounts for over 70% of this value, with a market cap of $101.2 billion.
The total trading volume of all stablecoins currently stands at approximately $112.7 billion, with USDT alone contributing $86.65 billion to these volumes.
Historically, the growth of stablecoin inflows to exchanges and market cap has been viewed as a reliable indicator of market participants’ positioning. In line with the exceptional performance of spot BTC ETFs and the upcoming Bitcoin supply halving, stablecoin reserves on exchanges continue to grow.
As previously reported, the increase in stablecoin inflows to exchanges played a significant role in propelling Bitcoin’s rally in October 2020.
The rising influx of stablecoins to exchanges is often considered a catalyst for positive price action in the crypto market, indicating that available capital is flowing back into digital assets.
According to Bitcoin Munger, a user on the X social network, there is a correlation between the growth of stablecoin market cap and the price of BTC.
Market data tracking firm Santiment’s analysts noted that medium and large investors are holding their positions despite BTC’s retracement after briefly reaching $69,324 on March 5. This combination of factors is seen as bullish.
At the time of writing, Bitcoin is trading at $67,863, representing a 0.73% increase over the past 24 hours, according to CoinMarketCap.
Please note that this article does not provide investment advice or recommendations. All investment and trading decisions involve risks, and readers should conduct their own research before making any decisions.