On-chain data shows that bitcoin dry powder has been building up on the exchanges as the stablecoins reserve exceeds $ 19 billion.
Stablecoins reserve exceeds $ 19 billion
According to a CryptoQuant post, exchanges now hold more than $ 19 billion worth of stablecoins. Such a large reserve could mean enough dry powder for Bitcoin to take a big step soon.
The all-exchange stablecoins reserve is an indicator that shows the amount of fiat-linked coins that are held in exchange wallets.
An increase in the value of this metric means that investors have withdrawn their positions in volatile markets like Bitcoin and are waiting for the right opportunity to get back in.
A decline could mean the opposite; Investors use their stablecoins stocks to get hold of BTC or other cryptocurrencies. You can also send your coins to personal wallets for storage purposes only.
Here is the graph for the stablecoins reserve versus last year’s bitcoin price:
The stablecoins reserve is skyrocketing | Source: CryptoQuant
As the graph above shows, the value of the indicator has risen sharply lately and is now over $ 19 billion. This is a new all-time high (ATH) value for the metric.
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The trend in the stablecoins reserve recently has been for the indicator to rise rapidly when the price of BTC shows a decline and then gradually fall as the price of Bitcoin moves up.
This makes sense because a drop in the metric’s value means investors are using those assets to buy BTC, which drives the price up.
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Based on this pattern, the current high value of the stablecoins reserve could mean that there is a lot of dry powder waiting to be poured into the Bitcoin market, which will help the cryptocurrency take a big leap.
It should be noted, however, that while the indicator appears to be reacting to the movements of BTC, investors could always use these fiat coins to buy other cryptocurrencies instead. Hence, the price of BTC would not be greatly affected in such a case.
At the time of writing, the price of BTC appears to be around $ 47.8,000, down 3% over the past 7 days. In the past 30 days, crypto has appreciated 16% in value.
The following graph shows the performance of Bitcoin over the past three months:
BTC is catching a downtrend | Source: BTCUSD on TradingView
Bitcoin hit above $ 49,000 yesterday, but has fallen back since then. It looks like the cryptocurrency is in a process of consolidation as its price fluctuates between $ 45,000 and $ 50,000.
It’s hard to say where the coin might go next. It could continue the current downtrend and fall further down, or if the stablecoins reserve is anything, investors could get in during a decline and give BTC a big rally.