142 Interactions, 2 Today
Re-visiting pre-set records, consolidating and correcting — this is how most of the market’s leading coins, including Bitcoin and Ethereum, have spent the last several days. Their prices have been swaying and have not yet taken a firm direction. In reality, at the time of publication, these two coins were trading at $49k and $3.2k, respectively.
Odds of the current trend prolonging
At this ambiguous juncture, analysing the change in stablecoin balance on exchanges will provide a clearer picture of what to expect in the future. At the time of writing, there was an interesting tendency throughout.
At the time of publication, the total balance on exchanges stood at a high of 19.2 billion. Exchanges typically keep substantial amounts of stablecoins in reserve for two reasons. One is to process withdrawal requests from customers during periods of severe market volatility, and the other is to allow users to purchase cryptocurrencies using trading pairs of different stablecoins.
At this point, most analysts have ruled out the likelihood of a significant drop. In retrospect, the cautious retreat that the market is currently experiencing is normally beneficial. Furthermore, at the time of writing, the price change for Bitcoin and Ethereum in the daily and weekly windows remained significantly below 4% and 1%, respectively.
This, in general, underscores the fact that volatility is not particularly significant at this point. As a result, anticipating withdrawals at this point is illogical.
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).
Furthermore, according to CoinGecko data, their trading volumes have climbed by 28.4 percent (USDT), 27.2 percent (USDC), and 23.11 percent (BUSD) in the last five days.
More crucially, the number of addresses having a non-zero balance has recently increased dramatically. Notably, at the time of writing, the figures were 3.5 million (USDT), 1.07 million (USDC), and 61.81k (BUSD). The aforementioned data, once again, increases the likelihood of the second circumstance occuring in the following days.
As a result, if the market emits a confirmation signal, investors would almost certainly reinvest their funds in big cryptocurrencies such as Bitcoin and Ethereum. When this happens, it is practically impossible to avoid a price increase in the underlying assets.