Re-visiting pre-set records, consolidating and correcting – this is typically how the last few days have looked like for most of the market’s top coins, including the likes of Bitcoin and Ethereum. Their prices have merely been see-sawing and haven’t taken a definitive turn yet. In fact, at press time, these two coins were trading at $49k and $3.2k respectively.
Odds of the current trend prolonging
Analyzing the change in stablecoin balance on exchanges at this indecisive juncture will present a clearer picture of what to expect going forward. An interesting trend observed therein, at the time of writing.
The cumulative balance on exchanges, stood at its 19.2 billion peak at press time. Exchanges usually hold large volumes of stablecoins in their reserve for two major reasons. One, to process users’ withdrawal requests during high market volatility, or two, to enable users to purchase cryptocurrencies using trading pairs of different stablecoins.
Source: CryptoQuant
Most analysts, at this stage, have ruled out the possibility of a massive dip. In retrospect, it can be said that the cautious pullback that the market is witnessing right now is typically healthy. Furthermore, the price change for both Bitcoin and Ethereum in the daily window and weekly window remained well below 4% and 1% respectively, at the time of writing.
This, by and large highlights the fact that the volatility is not really high at this stage. Ergo, expecting withdrawals at this stage doesn’t really make sense.
So, at this point, we’re left with the second option that essentially signals that market participants are gearing up for the buying spree that’s to set in, and are merely waiting for a confirmation.
Buying pressure setting in already?
Well, until the “right” time comes, market participants have been parking their funds into stable coins like USDT, USDC and BUSD. At the time of writing, Tether was able to maintain a 56.9% dominance in the stablecoin market, followed by USD Coin and Binance USD (23.4% and 10.5% respectively).
Additionally, as per data from from CoinGecko, their trading volumes have increased by 28.4% (USDT), 27.2% (USDC) and 23.11% (BUSD), in just the past five days.
More importantly, the number of addresses with a non-zero balance have witnessed a steep spike of late. Notably, the same stood at 3.5 million (USDT), 1.07 million (USDC) and 61.81k (BUSD), at the time of writing. The aforementioned data, again, intensifies the odds of the second situation unfolding itself in the coming days.
Source: Glassnode
So, whenever the market emits a confirmation signal, investors would inherently end up diverting their funds back into mainstream cryptocurrencies like Bitcoin and Ethereum. When that happens, the respective assets’ price pump would almost be inevitable.