There are always some peculiar metrics to keep tabs on in the cryptocurrency industry. The stablecoin inflows for USDT and BUSD have dropped off spectacularly and people keep stacking BTC and ETH. A market reversal seems nigh, although there is no real momentum to build on yet.
USDT and BUSD Lose Momentum
The popularity and importance of stablecoins in the crypto industry cannot be underestimated. A US dollar’s digital representation creates new liquidity for traders and provides some stability when crypto-assets turn very volatile. As Bitcoin, Ethereum, and others have seen tremendous volatility; there has been a stronger demand for currencies pegged to the US Dollar. That is interesting, as the recent UST implosion is still a fresh wound to many.
All of that stablecoin momentum is turning around all of a sudden. The USDT exchange inflow volume is at a 17-month low, confirming less interest in depositing the leading stablecoin onto exchanges. One would expect the opposite to come true at these low prices and plenty of profit potential, but the metrics indicate something else.
Furthermore, the amount of USDT across smart contracts has also dropped off significantly. It does not appear that traders took less interest in Tether’s pegged currency, but they are less eager to spend it or put it at risk. The TerraUSD debacle has shown many how unstable such currencies can e and why exiting positions remain the top priority. Keeping funds in a smart contract is a risk many are not willing to take right now, fueling further market fears.
Interestingly, this is not unique to Tether’s USDT either. BUSD, that other popular stablecoin, hit a 19-month low for exchange deposits as well. It is an uncanny trend that indicates buying liquidity has decreased significantly, although that doesn’t mean people aren’t buying crypto assets. The statistics below confirm the accumulation of BTC and ETH is still ongoing.
BTC and ETH Accumulation
There are two key metrics people should pay more attention to. First, there is the Bitcoin exchange inflow volume, which hit a one-month low. That is a crucial development as this metric spiked to a steep level a little over two weeks ago. As things calm down again, the massive selling of BTC should continue to slow down. Unfortunately, fewer USDT and BUSD deposits mean there may not be a bullish reversal right away.
On the Ethereum front, there is a fair bit of accumulating going on. The number of addresses holding 10 ETH or more has hit an 18-month high. After months of bearish market momentum, it is a more than welcome development and confirms people are still confident Ethereum will bounce back stronger.
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