Cryptocurrency exchanges have seen a dramatic surge in stable Bitcoin deposits over the past 24 hours, raising hopes that merchants will use the dollar-linked tokens to purchase Bitcoin.
The data retrieved from the blockchain analytics platform CryptoQuant showed that the exchanges’ stablecoins reserves hit a record high of 5.47 billion after adding $ 600 million in one day. The spike coincided worryingly with a modest upward move in the Bitcoin market, with the BTC / USD exchange rate rising nearly 3 percent to an intraday high of $ 36,888.
Crypto exchanges now hold stable coins valued at around $ 5.47 billion. Source: CryptoQuantCrypto exchanges now hold stable coins valued at around $ 5.47 billion. Source: CryptoQuant
The recent gains were part of a wider rebound, with Bitcoin bouncing off its January low of $ 28,732. Previously, the cryptocurrency had plummeted nearly 30 percent from its record high of $ 42,000.
Analysts now see the rally as a bullish continuation, with an asset resuming its uptrend after a short / long period of consolidation. Those with technical trading knowledge will find that Bitcoin forms a falling wedge pattern that usually leads to a full-blown upward breakout.
A descending wedge or triangle, it looks like we can pull back from that resistance line. If not, this would be a bullish sign, at least in the short term.
(The S / R zone is also USD 34,000.) $ BTC $ BTCUSD #bitcoin pic.twitter.com/xIc249IwbX
– CryptoHamster (@CryptoHamsterIO) January 29, 2021
The upward sentiment is the main reason people have increased their stable coin deposits on all cryptocurrency exchanges. Stablecoins are pegged to the US dollar and allow traders to buy / sell a crypto asset quickly.
As a result, many analysts see higher stable Bitcoin inflows as a sign of developing upward momentum in the cryptocurrency market, including the Bitcoin market.
The recent surge in stablecoin deposits also coincides with two extremely bullish events in the Bitcoin market.
First, payment processing giant Visa has announced plans to help banks build Bitcoin-enabled trading services. The move is expected to push the cryptocurrency market further into the mainstream, including half of the world’s population using Visa-enabled credit and debit cards.
Bitcoin is rising towards $ 37,000 on the improvement in fundamentals. Source: BTCUSD on TradingView.com Bitcoin rises towards $ 37,000 on improving fundamentals. Source: BTCUSD on TradingView.com
Second, Scott Minerd, chief investment officer at Guggenheim Partners, predicted that Bitcoin price could reach a valuation of $ 600,000. Speaking to CNN, the asset manager stated that the cryptocurrency would ultimately steal part of gold’s market capitalization in order to achieve higher valuations. Traders see both of these as hedging assets against inflation.
“We did a lot of basic research, and if you look at the supply of bitcoin relative to the supply of gold in the world, and the total value, if bitcoin were to go to these types of numbers, than you would about $ 400,000 to $ 600,000 each Talking Bitcoin, “said Minerd.
Bitcoin was trading at $ 36,710 at the time of going to press.