The crypto market is witnessing a surge in stablecoin inflows, driven by renewed bullish action and the anticipation of a spot Bitcoin exchange-traded fund (ETF) approval in the United States. The influx of Tether USDT and USD Coin USDC into exchanges indicates that traders might be preparing to enter the market based on their spot ETF expectations.
Stablecoin holdings in known crypto exchange wallets have risen from $18.05 billion on Jan. 1 to over $19.99 billion on Jan. 7, as per data from market data provider CryptoQuant. The total stablecoin market capitalization is currently estimated at around $133.4 billion, with the total trading volume of all stablecoins evaluated at around $70 billion. Tether alone accounts for $55.86 billion of these volumes.
Analysis of CryptoQuant data reveals that the stablecoin holdings on crypto exchanges rose sharply during the first eight days of 2024, with the number of inflow stablecoin transactions growing in tandem with the growth in BTC price. On Jan. 8, when Bitcoin flashed above $47,000, the number of inflow stablecoin transactions rose to nearly 33,000 transactions, up from 22,900.
The growth of the stablecoin market cap and stablecoin inflows and outflows to exchanges has historically been a good indicator for understanding market positioning. The possibility of the first-ever spot Bitcoin ETF being approved by the SEC, with a decision deadline on Jan. 10, has accelerated stablecoin exchange inflows. This trend began in early January as the market started to anticipate a bullish trend.
The Crypto Fear and Greed Index also indicates “extreme greed”, suggesting increased demand from retail and institutional investors. Large stablecoin inflows are often seen as a short-term catalyst for Bitcoin price action, indicating that sidelined capital is moving back into BTC.
Independent analyst Cole Garner highlighted the increasing stablecoin market capitalization ratio, which supports a bullish Bitcoin ETF outcome. Therefore, growing stablecoin allocations on crypto exchanges could be a sign that traders are preparing for market volatility during the Jan. 10 window for the SEC to issue a final decision on the spot Bitcoin ETFs.
At the time of writing, Bitcoin is trading at $46,715, up 0.87% over the last 24 hours, according to data from CoinGecko. It’s important to note that every investment and trading move involves risk, and individuals should conduct their own research when making a decision.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | North America |
| Countries | 🇺🇸 |
| Sentiment | positive |
| Relevance Score | 1 |
| People | Cole Garner |
| Companies | CryptoQuant, CoinMarketCap, Cointelegraph, CoinGecko, SEC |
| Currencies | US Dollar, Tether, Bitcoin |
| Securities | None |
