- Bitcoin’s recent uptrend has positively correlated with inflows from stablecoin exchanges
- This 7DMA inflow has been declining since December
Bitcoin [BTC] reached a high of $105.8k on Friday, January 17. The rapid price increases for the world’s leading cryptocurrency have been accompanied by a strong influx of stablecoins on the exchanges.
In a message at CryptoQuant InsightsThe inflow of stablecoins to exchanges has increased since Monday, January 13. The price of Bitcoin has also moved higher during the same period.
While this seemed bullish in the short term, it would be interesting to see if there were any repeating patterns from the previous bull run. AMBCrypto also explored the expansion of total market capitalization, in addition to stablecoin inflows.
Stablecoin inflows skyrocketed in November, but the trend has slowed
The 7-day simple moving average for stablecoin exchange inflows was used to smooth the data. It revealed a series of peaks between 2021 and 2023. These peaks represented increased inflows of stablecoins to exchanges.
The implications of increased inflows are bullish. More stablecoins sent to exchanges means there is more purchasing power in the market. Likewise, a drop in inflows can indicate bearish market conditions.
The 7DMA made strong highs in November following the results of the 2024 US presidential election. It remained at these high highs for almost a month, but has been falling since the second week of December.
This meant that despite the short-term inflows, the trend over the past six weeks has not been favorable for buyers.
Source: TOTAL on TradingView
Comparing stablecoin inflows to the overall cryptocurrency market cap, 2021-2022 saw the bull run take off and end in November 2021. Despite the slump in price action since then, the graph of inflows in 2022 and also in March showed see several significant upward developments. 2023.
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Therefore, it served to illustrate that the inflow metric does not necessarily dictate the movement of the overall crypto market. Furthermore, the inflows are also driving newly minted stablecoins flooding onto the exchanges, which has been steadily increasing over time.
Simply put, the increase in the flow of stablecoins is encouraging in the short term. However, the benchmark’s downward trend since December must be broken for the crypto market to continue its rally.