Key Takeaways
What did the influx of stablecoins tell us?
The flow to centralized exchanges and the move to derivatives exchanges showed potential purchasing power in the market, but heightened the possibility of another liquidity rush south for BTC.
How should investors react to Monday’s price action?
Unless Bitcoin climbs back above the $117k area, swing traders and investors may maintain a bearish market outlook.
On October 13, Bitcoin [BTC] rose to $115,963, marking a 5.84% gain from the previous day’s low of $109,500. However, the upward momentum was halted as bearish pressure forced a pullback from the key supply zone between $115.3k and $117k.
The rejection in the resistance zone led to a dip of 3.54% in Bitcoin prices, which reached $111.8k at the time of writing.
A dip into the $108k area was a possibility that traders should be prepared for. The short-term bias is bearish unless buyers manage to support the $117,000 region.
Stable currency flows indicate that greater volatility is imminent
While the market leader faced an uphill battle at the local resistance level, analysts noticed a steady influx of stablecoins onto the exchanges in recent days.
In a post on CryptoQuant Insights, user Amr Taha noted that Binance saw Tether (USDT) inflows of $590 million through TRON [TRX] network, the go-to network for stablecoin settlement.
These inflows coincided with Bitcoin price rising above $115,000, highlighting the increased purchasing power in the market. The influx of stablecoins was accompanied by increased whale wallet activity ($100 million).
The analyst pointed out that this increases the chances of a sharp move, and volatility could go either way.
Another analyst, CryptoOnchainhighlighted stablecoin activity on the Ethereum [ETH] network. Derivatives exchanges saw much of this inflow, showing that market participants bought the dip on margin.
This was a strong sign of bullish conviction, but it could be punished with another liquidity rush south.
Joao WedsonCEO and founder of analytics platform Alpharactal, estimates one 60%-75% chance that Bitcoin will retest its lows on October 10, potentially causing another price drop this week and catching overly optimistic bulls off guard.
BTC traders should brace for further downside but could switch to a bullish near-term outlook if the price breaks above the $117,000 mark.
As for altcoin traders and investors, the situation is more complex given the greater volatility. Many altcoins saw a price drop of 40%-70% within hours on October 10. Another such decline would be catastrophic for those hoping to hit the bottom.
Altcoin sentiment signals opportunity!
In one post on X (formerly Twitter)analyst DonkerFost made the point that “the best time to gain exposure to altcoins is often when no one wants them anymore.”
Only 10% of altcoins on Binance were above 200DMA. The analyst argued that this showed widespread disinterest in the altcoin market and was a valuable buying opportunity.
Whether this is true remains to be seen, but not all altcoins are equal. Most of them tend to lose value against Bitcoin over the years, and struggle to maintain relevance in market cycles.
Therefore, investors should choose DYOR and select what they believe to be strong projects if they want to buy this dip.