Stablecoin Exchange Inflow Mean Hits ATH, Why This Could Be Bullish For Bitcoin

On-chain data shows the stablecoin exchange inflow mean has reached a new all-time high, here’s why this might prove to be bullish for Bitcoin.

Stablecoin Exchange Inflow Mean Has Surged Up To A New ATH Recently

As pointed out by an analyst in a CryptoQuant post, these inflows can be positive for Bitcoin in the long term, but might be bearish in the short term.

The “stablecoin exchange inflow mean” is an indicator that measures the average amount of stablecoins per transaction going into the wallets of centralized exchanges.

As stablecoins are relatively stable in value (as their name already implies) due to them being tied to fiat currencies, investors in the crypto space use them for escaping the volatility associated with most other coins.

Once these holders feel that prices are right to enter back into volatile markets like Bitcoin, they convert their stables into them using exchanges.

Because of this, a large number of these coins moving into exchanges can provide buying pressure for the volatile cryptos, and hence surge up their prices.

Now, here is a chart that shows the trend in the stablecoin exchange inflow mean, as well as the corresponding Bitcoin prices, over the last couple of years:

The value of the metric seems to have been pretty high in recent days | Source: CryptoQuant

As you can see in the above graph, the stablecoin exchange inflow mean has observed some sharp uptrend in recent weeks, and has now set a new all-time high.

This suggests that the average transaction going into exchange wallets is currently carrying larger amounts than ever.

In the chart, the quant has also marked the periods where a similar trend was seen during the last couple of years.

It looks like in both the previous instances, high values of the indicator lead to the price of Bitcoin forming a bottom, and then subsequently observing some uplift.

However, the bullish effect has usually been delayed, suggesting that the current high values would only be constructive for BTC in the long term.

The analyst notes that in the short term, this trend in the stablecoin inflow mean could cause volatility for Bitcoin, thus possibly providing a negative effect to it.

Bitcoin Price

At the time of writing, Bitcoin’s price floats around $20.3k, down 2% in the last week. Over the past month, the crypto has gained 6% in value.

Looks like the price of the crypto has slightly declined in the last few days | Source: BTCUSD on TradingView
Featured image from Traxer on Unsplash.com, charts from TradingView.com, CryptoQaunt.com