On-chain data shows the USDC exchange inflow has spiked up. Historically, stablecoins have provided dry powder for kicking off new Bitcoin rallies.
USDC Exchange Inflow Sharply Rose To High Values Recently
As explained by an analyst in a CryptoQuant post, almost one billion USDC has flowed into exchanges recently. Past pattern suggests this may lead to uptrend for Bitcoin.
The “USD Coin exchange inflow” is an indicator that measures the total amount of the stablecoin entering wallets of all exchanges within a given period.
When the value of this indicator moves up, it means investors are depositing a higher amount of coins at the moment. Usually, holders transfer stablecoins to exchanges for converting them into a volatile crypto, like Bitcoin. They may also withdraw the coins to fiat.
Investors use stablecoins like USDC when they want to exit volatile markets and hold on until prices are favorable enough for re-entering them. This implies that high stablecoin exchange inflows may show that prices are once again good for re-entry.
Related Reading | Bitcoin Trading Volume Has Now Stabilized At High Values, But For How Long?
Now, here is a chart that shows the trend in the USD Coin exchange inflows over the past year:
Looks like the value of the metric has surged up to high values recently | Source: CryptoQuant
As you can see in the above graph, the USDC inflow has spiked up over the past few weeks. These inflows have amounted to around 1 billion coins.
There were two other instances earlier during the period where similar values were also observed. Looking at the Bitcoin price curve in the same chart, it seems like some time following such large spikes in the indicator, the value of the crypto has always surged up as well.
Related Reading | Bitcoin Exchange Reserve Has Now Reached An Equilibrium After 2 Years Of Downtrend
This makes sense as many investors deposit the USDC for converting to BTC, so such inflows provide for a fresh supply of dry powder for sustaining a rally.
Now it remains to be seen whether a similar effect on the price of Bitcoin will also be there this time, or if this USDC inflow will pump some other coins instead.
Bitcoin Price
At the time of writing, Bitcoin’s price floats around $39.2k, down 10% in the last seven days. Over the past month, the crypto has lost 11% in value.
The below chart shows the trend in the price of the coin over the last five days.
BTC's price seems to have dropped down once again today | Source: BTCUSD on TradingView
Yesterday, Bitcoin showed some sharp uptrend and broke above the $42k level again. However, today the coin looks to have plunged down once more.
Featured image from Unsplash.com, charts from TradingView.com, CryptoQaunt.com
