bitcoin has seen a pullback to the $58,000 level over the past day. Here's the possible cause, according to on-chain data.
Exchanges have seen a large number of Tether withdrawals recently
According to data from the market intelligence platform x.com/intotheblock/status/1823644301059858457″ target=”_blank” rel=”nofollow”>In the blockCentralized exchanges have recently seen a wave of Tether (USDT) outflows exceeding $1 billion.
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Investors typically hold their coins on exchanges when they want to trade them in the near future, so withdrawing their tokens potentially implies that they are interested in holding them for the long term.
In the case of volatile assets like bitcoin, currency outflows can naturally be a bullish signal for this reason. However, in the context of the current topic, the asset being withdrawn is a stablecoin, so the implication for the market is a little different.
Typically, investors store their capital in the form of fiat-pegged tokens, such as Tether, when they want to escape the volatility associated with coins like btc. These holders plan to eventually venture back to the other side of the market and may use exchanges to do so.
When holders buy assets like bitcoin using their stablecoin, they naturally end up driving up their prices. Therefore, stablecoin inflows into exchanges can be a bullish signal for the sector.
However, withdrawals of USDT and other cryptocurrencies for self-custody may be a bearish signal for the market as it shows that investors do not believe that they will make a shift to the volatile side in the near future.
Therefore, the latest Tether withdrawals may be the reason why the bitcoin price has plummeted. This outflow of USDT from exchanges could even have represented new btc sales, as many investors like to move into self-custody as soon as they have exchanged assets.
As IntoTheBlock pointed out on the chart, the last two large USDT outflows also had a bearish effect on btc.
In other news, the cryptocurrency derivatives market as a whole has seen a large amount of liquidations as a result of the volatility that bitcoin and other coins have shown over the past day.
Below is a table of Coin crystal This sums up the sell-offs that have occurred in the latest volatile phase of the market.
As you can see above, over the past day there have been around $146 million worth of cryptocurrency liquidations, of which $120 million came from long contracts alone, representing over 80% of the total.
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Interestingly, ethereum (eth) is the token that has contributed the most to this derivatives wave and not bitcoin as is usually the case. That said, eth has only $6 million more in liquidations than btc.
btc Price
At the time of writing, bitcoin is trading around $58,800, down 4% over the past 24 hours.
Featured image by Dall-E, IntoTheBlock.com, chart by TradingView.com