Bitcoin Price May Turn Lower as Crypto Exchanges See $1B USDT Withdrawal: IntoTheBlock

Bitcoin entered a downtrend earlier this year when outflows from USDT exchanges exceeded $1 billion, indicating that investors were adopting a risk-averse stance, IntoTheBlock said.

One analyst noted that the current price action is “eerily similar” to last year’s action, when Bitcoin traded sideways for two months after a major drop in August.

Cryptocurrency prices have rebounded sharply from last week’s turbulence, with bitcoin {{BTC}} rising above $60,000 after falling below $50,000 during the Aug. 5 crash. But further gains may be difficult to come by — at least by a measure that foreshadows recent local highs.

More than $1 billion in Tether’s USDT stablecoin was withdrawn from cryptocurrency exchanges on Tuesday, the most in a single day since May, cryptocurrency analytics firm IntoTheBlock said.

“In recent cases where withdrawals exceeded $1 billion, Bitcoin’s decline soon after suggests that investors are adopting a risk-averse attitude and moving their funds to safer environments such as cold wallets in anticipation of market volatility,” IntoTheBlock analysts wrote.

However, there are subtleties in interpreting the data. Stable deposits to exchanges are positive and signal new funds coming to purchase assets, but withdrawals are not always negative as users can move their funds to decentralized finance (DeFi) to generate returns. Notably, yields for providing USDT liquidity in DeFi pools have been on a downward trend, DefiLlama data shows.

Over $1 billion worth of USDT was withdrawn from exchanges yesterday, marking the largest outflow of Tether since May.

While investments are generally seen as being in an uptrend (indicating that users are preparing to purchase assets), pullbacks can be interpreted in a more nuanced manner.

For example, users can… pic.twitter.com/7LQSeNi9kE

— IntoTheBlock (@intotheblock) August 14, 2024

Bitcoin fell to $59,000 in the US on Wednesday, completely reversing yesterday’s rally above $61,000, despite the US CPI inflation report released on Wednesday restoring expectations for a rate cut in September.

Zooming out, seasonal trends do not favor higher crypto prices. For the most times in Bitcoin’s history, August and September have delivered negative monthly returns, data compiled by CoinGlass shows.

Well-followed crypto analyst Miles Deutscher noted that bitcoin’s current price action resembles that of last year. BTC then fell from the top of its $30,000 range to $24,000 during a major leverage run in August and traded mostly sideways for two months before starting a rally in October.

The story continues

“Retail interest is rapidly waning, disinterest among existing market participants, lack of clear narratives,” he said. “This looks eerily similar to August-October of last year.”

This situation is eerily similar to August-October of last year.

• Retail interest is rapidly declining (YT views fell off a cliff last week)
• Lack of interest among existing market participants
• Lack of clear narratives

(And #Bitcoin (price action looks the same too) pic.twitter.com/Y37iDoeSOl

— Miles Deutscher (@milesdeutscher) August 14, 2024