Bitcoin’s Prospects Strengthen as Key Stablecoin Metric Slides to Lowest Level in 18 Months

CryptoQuant said that the decreasing “exchange stablecoin ratio” indicates that selling pressure in the BTC market is decreasing.

The supply of the two largest stablecoins, USDT and USDC, continues to increase.

Bitcoin {{BTC}} is rapidly approaching $60,000 after last week’s fiasco, which saw it dip below $50,000 at one point.

The recovery is likely to gain momentum as the “exchange stablecoin ratio,” which measures the ratio of the amount of BTC held in wallets connected to centralized exchanges to stablecoins, suggests that selling pressure is easing.

The rate fell to its lowest level since February 2023, continuing a prolonged downward trend that began in June of last year, according to data tracked by blockchain analytics firm CryptoQuant.

“This could indicate that selling pressure on Bitcoin is easing as fewer investors are converting their BTC into stablecoins,” CryptoQuant told CoinDesk in a Telegram chat.

“It could also indicate bullish sentiment, where investors are holding BTC in anticipation of future price increases,” CryptoQuant added.

Bitcoin: The stablecoin rate on the exchange. (CryptoQuant)

Stablecoins are cryptocurrencies whose value is pegged to an external reference, such as the U.S. dollar. These digital assets help investors bypass the price volatility associated with other tokens and are commonly used to fund spot crypto purchases and derivatives trading.

According to charting platform TradingView, the combined supply of tether (USDT) and USD Coin (USDC), the top two stablecoins by market cap, has increased by nearly $2 billion since the Aug. 5 market crash to $150.15 billion. On an annual basis, the combined supply of USDT and USDC is up almost 30%.

This indicates that the market is being continuously flooded with fiat money, likely by opportunity hunters looking to grab BTC at lower valuations.

The development is consistent with the constructive outlook put forward by some analysts.

“Spot ETFs saw positive net flows on Monday. BTC (+$28M) and ETH (+$5M) saw institutional support after the weekend decline. This shows a certain resilience in times of fear and potentially helps reduce Bitcoin’s volatility over the long term. Yesterday, the $58,500 level we mentioned held strongly and Bitcoin rose above $60,500 before falling back to $59,500,” Valentin Fournier, an analyst at digital asset research firm BRN, told CoinDeks in an email.

“Momentum is low but remains positive as we predicted. We see Bitcoin approaching the upper trend of its range ($67,000-$69,000) in the coming weeks,” Fournier added.

Combined supply of USDT and USDC and price of BTC. (TradingView)