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On-chain data shows that exchanges have continued to receive stablecoin deposits recently, a sign that could be bullish for bitcoin and other digital assets.
Stablecoin Exchange Net Flow Has Remained Positive Recently
As noted by an analyst at CryptoQuant Quicktake mailstablecoins have been flowing onto exchanges recently. The relevant on-chain metric here is “Exchange Netflow”, which tracks the net amount of a given asset flowing into or out of wallets associated with centralized platforms.
When the value of this metric is positive, it means that investors are making net deposits of the currency on exchanges. This trend suggests that holders want to sell the asset.
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On the other hand, the fact that the indicator is negative implies that investors prefer to hold the cryptocurrency, since they are keeping their tokens in self-custody. The implications of these trends for the overall sector and the asset itself may be different depending on the exact type of currency witnessing the outflows/inflows.
In the case of volatile assets like bitcoin, a positive Netflow can be bearish for the price as it means holders are looking to sell. btc also acts as one of the main transition points for capital in the sector as a whole, so its sale may also be a bad sign for the rest of the coins.
Deposits of stablecoins also imply that traders want to sell them, but since their price always remains stable around $1, selling has no “bearish” effect on them.
Like bitcoin, stablecoins act as a gateway for capital into the sector. More specifically, investors put their money into stablecoins when they want to avoid the volatility associated with other assets.
These holders usually plan to eventually delve into volatile currencies and, once ready, transfer these fiat-pegged tokens to exchanges to make the trade. Naturally, this acts as buying pressure for any asset they are moving into. As such, positive net stablecoin exchange flows are considered bullish for bitcoin.
Now, here is the chart shared by quant showing the recent trend on the Exchange Netflow for stablecoins:
From the chart, you can see that the net stablecoin exchange flow has remained mostly within the positive territory over the past few weeks. In addition to these inflows, bitcoin has been breaking record after record, so these stablecoin deposits have likely acted as fuel for the asset.
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The indicator's value has continued to show strength recently, so it appears investors are not done with their btc accumulation yet. If the above trend continues, the latest stablecoin inflows may prolong the rally and perhaps help the asset finally surpass the dream target of $100,000.
bitcoin price
bitcoin had seen a drop below the $96,000 level yesterday, but it appears that the coin has already recovered as its price is now trading around $98,400.
Dall-E Featured Image, CryptoQuant.com, TradingView.com Chart
