Bitcoin (BTC) extended its recovery on January 14th, regaining the $ 38,000 level. Moreover, the weekly candle has turned green for the fifth week in a row despite falling 28% earlier this week.
BTC / USD weekly candlestick chart (Bitstamp). Source: Tradingview
Meanwhile, Stable currency deposits flow into cryptocurrency exchanges, According to CryptoQuant data. This entry could be a short-term catalyst for Bitcoin.Because it indicates that the capital is due to BTC.
Stable currency influx on stock exchanges. Source: CryptoQuant
Why are stablecoins indicating strong demand from bitcoin buyers?
In the cryptocurrency market, Many traders sell crypto assets, such as Bitcoin, into stablecoins instead of cash.
Las Stablecoins, Como Tether (USDT), Linked to the value of the US dollar and negotiable on all exchanges.
Most exchanges require complex knowledge of the customer verification process (KYC) for wire transfers, and Depositing cash on exchanges can take a long time.
And so on , If a whale or high net worth investor wants to buy and sell millions of dollars of bitcoin, stable currencies can be more suitable than cash..
Rising demand for stablecoins from traders has spiked Tether’s valuation in recent months. Last month, Tether’s market cap exceeded $ 20 billion. A month later, that number had already surpassed $ 24 billion, indicating a marginal increase in capital in the cryptocurrency market.
The dry powder is transferred to the exchangers
WithinIn the past 24 hours, stable currency deposits on exchanges have increased dramatically. CryptoQuant tracks exchange wallets and monitors stable currency deposits and outflows.
Stock exchange stable currency reserves. Source: CryptoQuant
On major exchanges, Stablecoin deposits rose on January 13th, just as the bitcoin price began to recover.
On January 13th Bitcoin’s price dropped to $ 32,500 after settling nearly $ 1 billion futures contracts.
Investors were actively buying during lower prices, As evidenced by the increase in stable currency deposits and the growing open interest in the Bitcoin futures market. as a result, Bitcoin recorded a rapid turnaround, rising by more than 10% overnight.
Open interest bitcoin futures. Source: Bybt.com
And then what?
Alex Saunders, cryptocurrency analyst, said so Stable currencies often “flood the markets” indicating an uptrend.
Before recovering, Michael Van de Pope, a full-time trader on the Amsterdam Stock Exchange, said Bitcoin would likely reach an all-time high if it crossed $ 38,000 again.
Overnight, Bitcoin price breached the $ 38,000 resistance zone, indicated by Van de Pope. And so on , In the short term, BTC is on the way to re-test its record. He said:
“Bitcoin hasn’t changed much. He changed the $ 33,000 level to support and is therefore eager to test $ 37,000 – $ 38,000. That must change. If that happens, we would be excited to reach new highs ever. If not.” There is likely to be more consolidation. “
Bitcoin’s rally also coincides with the opening of Grayscale products on January 13th. If the value of Bitcoin continues to rise, this could attract more institutional and accredited investors exposure to BTC through the Grayscale Bitcoin Trust (GBTC)..
It can also be said that the reopening of the GBTC is starting to rise, which means that The upside is being led by institutions, not retail investors.