Cryptocurrency exchanges have seen a dramatic rise in stablecoin deposits in the past 24 hours, raising hopes that traders will use the dollar-linked tokens to buy Bitcoin.
Data pulled by the blockchain analytics platform CryptoQuant showed that exchanges’ stablecoins reserves hit a record high of 5.47 billion after adding $ 600 million per day. The spike frightfully coincided with a modest upward move in the Bitcoin market, in which the BTC / USD exchange rate rose nearly 3 percent and hit an intraday record of $ 36,888.
Crypto exchanges are now holding around $5.47 billion worth of stablecoins. Source: CryptoQuant
The latest acquisitions came as part of a broader recovery movement Bitcoin is recovering from its January low of $ 28,732. Before that, the cryptocurrency had crashed nearly 30 percent from its all-time high of nearly $ 42,000.
Analysts now see the rally as an optimistic continuation, with an asset resuming its upward trend after a short / prolonged period of consolidation. Those with technical trading expertise note that Bitcoin forms a Falling Wedge pattern that typically leads to a full-fledged breakout upwards.
A falling wedge or a triangle, it looks like we can have a pull back from that resistance line. If not, it would be a rather bullish sign, at least in the short term.
(The S / N zone is also $ 34k.)$ BTC $ BTCUSD #bitcoin pic.twitter.com/xIc249IwbX
– CryptoHamster (@CryptoHamsterIO) January 29, 2021
The positive sentiments serve as the main reason why people have been increasing their stablecoin deposits on all cryptocurrency exchanges. Stablecoins, linked to the US dollar, allow traders to quickly buy / sell a cryptocurrency.
Therefore, many analysts see higher stablecoin inflows as a sign of growing bullish momentum in the cryptocurrency market, including that of Bitcoin.
The recent run-up in stablecoin deposits also coincides with two extremely bullish events in the Bitcoin market.
First, payment processing giant Visa has unveiled its plans to help banks set up bitcoin-enabled trading services. The move expects to push the cryptocurrency market further into the mainstream, including half of the world’s population using Visa-compatible credit and debit cards.
Bitcoin rises towards $37,000 on improving fundamentals. Source: BTCUSD on TradingView.com
Second, Scott Minerd, Guggenheim Partners chief investment officer, predicted that the Bitcoin price could reach a valuation of $ 600,000. In conversation with CNN, the asset manager stated that the cryptocurrency would eventually steal some of the market cap of gold to achieve higher valuations. Traders view both as assets as hedging against inflation.
“We’ve done a lot of basic research, and if you consider Bitcoin’s supply relatively, say, the world’s supply of gold, and what the total value is, if Bitcoin were going to numbers like this, ‘I got it about $ 400,000 to $ 600,000 per Bitcoin, ”- said Mr. Minerd.
Bitcoin was trading at $ 36,710 at the time of this press.