The Bitcoin (BTC) price extended its recovery on Jan. 14, restoring the $ 38,000 level.What’s more, the weekly candle has now turned green for the fifth week in a row, despite a 28% crash. Earlier this week
Meanwhile, stablecoin deposits are pouring into cryptocurrency exchanges, according to CryptoQuant.This inflow could serve as a short-term accelerator for Bitcoin as it indicates that sidelined funds are moving back to BTC.
Why do stablecoins indicate strong buyer demand for Bitcoin?
In the cryptocurrency market, many traders sell crypto assets such as Bitcoin to stablecoins instead of cash.
Stablecoins such as Tether (USDT) are pegged to the value of the US dollar and can be traded on an exchange.
Most exchanges require a Know Your Customer (KYC) validation process for wire transfers and depositing cash into the exchange can be time consuming.
So if whales or high-value investors want to buy and sell millions of bitcoin, stablecoin may be more convenient than cash.
The high demand for stablecoins from traders has fueled Tether’s valuation in recent months. Last month, Tether’s market capitalization surpassed $ 20 billion. A month later, the figure exceeded $ 24 billion, indicating a rise in deprived funds within the cryptocurrency market.
The dry powder moves to exchange.
Meanwhile, stablecoin deposits on exchanges have increased significantly in the past 24 hours.CryptoQuant tracks the exchange’s wallets and observes the stablecoin deposits and outflows.
In major exchanges, stablecoin deposits significantly jumped on January 13 as the Bitcoin price began to recover.
As of January 13, Bitcoin’s price dropped to just $ 32,500 after nearly $ 1 billion of futures were liquidated.
Investors are buying the decline, as illustrated by the rise in stablecoin deposits and the rising open interest of the Bitcoin futures market.As a result, Bitcoin has seen a rapid rebound with more than 10 mobilization. % Overnight
So what will happen next?
Alex Saunders, cryptocurrency analyst (cryptocurrency) says that stablecoins are “overwhelming exchanges” that often indicate a positive trend.
Prior to the rebound, Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said Bitcoin was likely to hit a record high if it surpassed $ 38,000 again.
Just overnight, the price of Bitcoin broke through the $ 38,000 resistance, which Van de Poppe stated, so in the short term, BTC is in the test of another record high, he said:
“Bitcoin hasn’t changed much, it flipped the $ 33,000 level for support, so it was eager to test the level. That $ 37,000-38,000 had to be flipped. If so, we will be eager to score new highs all the time. If not, there will be more consolidation. ”
Bitcoin’s rise also coincides with Grayscale’s January 13th product launch.If Bitcoin’s value continues to rise, it could drive more institutional and certified investors to earn BTC. Through the Grayscale Bitcoin Trust (GBTC)
There is also a strong argument that the reopening of the GBTC is the start of a rally, showing that an uptrend is led by institutions and not by retail investors.