The price of Bitcoin (BTC) expanded its recovery on January 14 and regained the $ 38,000 level. What’s more, the weekly candle has now turned green for the fifth consecutive week despite the 28% collapse earlier this week.
Meanwhile, stablecoin deposits are flowing in the exchange of cryptocurrencies, according to data from CryptoQuant. This inflow could be a catalyst for Bitcoin in the short term, as it indicates that outside capital is moving back to BTC.
Why do stable coins indicate a strong demand from the buyer for Bitcoin?
In the cryptocurrency market, many traders sell cryptocurrencies, such as Bitcoin, to stable coins rather than cash.
Stable currencies, such as Tether (USDT), are linked to the value of the US dollar and are traded on exchanges.
Most exchanges require a complicated Know Your Customer (KYC) verification process for bank transfers, and cash deposits in exchanges can take a long time.
As such, if a whale or a high net worth investor wants to buy and sell millions of dollars worth of Bitcoin, it can be much more convenient than cash.
The large demand for stable coins from traders has led to an increase in the valuation of Tether over the past few months. Last month, Tether’s market capitalization exceeded $ 20 billion. A month later, this number is already more than $ 24 billion, indicating an increase in foreign capital within the cryptocurrency market.
Dry powder moves to central
Meanwhile, stablecoin deposits have increased significantly over the past 24 hours. CryptoQuant tracks the wallets and tracks the deposits and outflows of the stable.
Over the largest exchange, stablecoin deposits rose markedly on January 13, just as the price of Bitcoin began to recover.
On January 13, the price of Bitcoin dropped to as low as $ 32,500 after nearly $ 1 billion worth of futures were liquidated.
Investors actively bought the dip, as evidenced by the increase in stable deposits and the growing open interest of the Bitcoin futures market. As a result, Bitcoin experienced a rapid turnaround and rose by more than 10% overnight.
So, what’s next?
Alex Saunders, a cryptocurrency analyst, said that steel coins are ‘flood turns’, which is often an indication of a bullish trend.
Prior to the recovery, Michael van de Poppe, a full-time trader on the Amsterdam Stock Exchange, said Bitcoin was likely to peak if it exceeded $ 38,000 again.
The price of Bitcoin penetrated overnight through the resistance zone of $ 38,000, which Van de Poppe determined. Therefore, BTC is on track in the short term to test its record high again. He said:
‘Bitcoin has not changed much. It turned the $ 33,000 level around for support and is therefore eager to test the $ 37,000-38,000 level. That one must turn. If so, we would love to see new highlights of all time. If not, more consolidation is likely. ”
The Bitcoin rally also coincides with the opening of Grayscale’s products on January 13th. If the value of Bitcoin continues to rise, it could drive more institutional and accredited investors to gain exposure to BTC through the Grayscale Bitcoin Trust (GBTC).
There is also a strong argument to be made that the reopening of GBTC started the march, to begin with, suggesting that the rising trend is being led by institutions, not by retail investors.