Stablecoins point to positive market sentiment

CryptoQuant derives from an increased inflow of Stabelcoins that private investors are increasingly investing again.

In the days preceding Bitcoin’s recent upturn, Stablecoins showed unusually high activity.

As a reminder, Stablecoins are crypto-currencies that achieve their eponymous (value) stability by linking to an external asset, such as gold or the US dollar. In the crypto markets, Stablecoins are often used to buy other crypto currencies.

On October 18, shortly before Bitcoin was able to make a substantial jump, the inflow of Stablecoins on crypto exchanges initially reached a record high of 56,000, before it was even increased to 60,000, as the data from CryptoQuant shows. Crypto market researchers looked at the USDT stablecoins on Ethereum, PAX, USDC, TUSD, DAI, SAI, BUSD, HUSD and USDK.

As CryptoQuant CEO Ki Young Ju explained to Cointelegraph, although the inflow was unusually high, the equivalent value in USD was not out of the norm. Nevertheless, the expert sees this as a sign that investors are currently in a positive mood:

„The fact that private investors are currently investing more means that the market situation is turning for the better“.

According to Ju, the high number of wallet addresses and transactions used indicates that the inflow of stablecoins is coming from many private investors and not from a few large investors. The logic behind his argument is that private investors move their Stablecoins to crypto exchanges to buy Bitcoin Bank. From this he in turn deduces that the market situation is good.

Stablecoin publisher Tether also „mined“ USDT 450 million on the block chain of Tron (TRX) yesterday. As CTO Paolo Ardoino explains, the amount was initially only released but not yet put into circulation:

„Announcement: 300 million USDT were „minted“ on the Tron network. This transaction has been approved but not yet settled, which means that this amount will not be put into circulation until the next cycle“.

The market capitalisation of Tether has quadrupled in 2020. While at the beginning of the year the market capitalisation was USD 4 billion, at the time of going to press it is now just under USD 16 billion. Meanwhile, Bitcoin assets held on crypto exchanges have fallen below BTC 2.5 million for the first time.