Santiment Reveals Trigger Behind Bitcoin Rally: Will This Signal Reignite?
28 November 2023 - 1:00AM
NEWSBTC
The on-chain analytics firm Santiment has explained how Tether
(USD) and USD Coin (USDC) exchange inflows preceded the recent
Bitcoin rally. Bitcoin Rally May Restart If Stablecoins See Further
Exchange Deposits In a new post on X, Santiment discussed the trend
in the supply of exchanges of various assets in the cryptocurrency
sector. The “supply on exchanges” is an indicator that keeps track
of the percentage of the total circulating supply of the given coin
currently sitting in the wallets of all centralized exchanges.
Related Reading: Analyst Sets $47,000 Target For Bitcoin If This
Happens The below chart shows the trend in this indicator for
Bitcoin (BTC), Ethereum (ETH), Chainlink (LINK), Polygon (MATIC),
Tether (USDT), and USD Coin (USDC) over the past few months. The
data for the exchange supply of the different coins | Source:
Santiment on X Depending on what type of asset it is, the
significance of the supply on exchanges can differ. In the case of
volatile assets like Bitcoin, the supply being stored on these
platforms may be considered the available selling supply of the
asset, as one of the main reasons investors may deposit their coins
to the exchanges is for selling. Thus, when this indicator trends
up for these cryptocurrencies, it’s a potential sign that selling
pressure in the sector is going up. The graph shows that Polygon
has seen 0.7% of its supply move to exchanges in the past month,
which could be a bearish sign for its price. On the other hand,
Bitcoin has observed withdrawals equivalent to 0.33% of its supply
during the same period. Such a decline in the indicator can suggest
that investors may participate in accumulation, as they are taking
their coins off towards self-custodial wallets. As for the
stablecoins, an increase in the supply on exchanges also suggests
that investors wish to swap these tokens. This selling of stables,
though, actually provides a buying boost to the volatile side of
the market, as the investors may use these assets to shift into
Bitcoin and others. As the chart shows, both Tether and USD Coin
saw the exchange supply rise between August and October. More
specifically, USDT and USDC observed 3.54% and 0.72% of their
supplies moving into these platforms, respectively. “These
transfers were the predecessor to the crypto-wide rally from late
October to mid-November,” explains Santiment. Related Reading:
Bitcoin Spot ETF Will Bring $70 Billion In New Money To Trigger
Price Rally – Glassnode In the past month, however, 3.1% of the
Tether supply has left these platforms, while the USD Coin has
observed the metric move sideways. This would suggest that buying
pressure has stopped rising, and the opposite may occur. “After a
cooldown, USDT & USDC returning to exchanges will be crucial to
seeing market caps continuing to increase for a big final 5 weeks
of 2023,” notes the analytics firm. BTC Price Bitcoin has
registered some drawdown today as the asset’s price has now slipped
under the $36,800 mark. Looks like the asset has been going down
recently | Source: BTCUSD on TradingView Featured image from
Kanchanara on Unsplash.com, charts from TradingView.com,
Santiment.net
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