Data shows the stablecoin reserve on Binance has shot up to a new record recently, a sign that could be bullish for Bitcoin and other coins.
Stablecoin Exchange Reserve On Binance Has Seen Rapid Growth Recently
As explained by an analyst in a CryptoQuant Quicktake post, the stablecoin Binance reserve has shot up recently. The on-chain indicator of relevance here is the “Exchange Reserve,” which measures the total amount of a given asset that’s sitting in the wallets of one or more centralized exchanges.
When the value of this metric goes down, it means the investors are depositing a net amount of the token to these platforms. Such a trend implies there is demand in the market for trading away the cryptocurrency.
Related Reading: Ethereum Overtakes Bitcoin: Data Shows ETH HODLing Sentiment Stronger Than BTC
For volatile assets like Bitcoin, this kind of trend can have a bearish effect on their prices. In the case of stablecoins, though, the same doesn’t hold true as their prices are, by definition, stable around the $1 mark.
That doesn’t mean, however, that the selling of stablecoins is of no consequence for the sector. Investors generally store their capital in the form of these fiat-tied tokens when they want to avoid the volatility associated with BTC and others, but once they feel the time is right to buy back in, they make a swap using exchanges.
As such, stablecoin inflows into exchanges can be a bullish sign for volatile assets like Bitcoin, since they showcase that the investors are potentially interested in trading their stables in favor of these tokens.
On the other hand, the Exchange Reserve noting a decline implies the investors are withdrawing the asset into their self-custodial wallets, possibly to hold into the long-term. Once again, the trend is opposite between Bitcoin and stablecoins, with the former’s outflows being bullish and the latter’s bearish.
Now, here is a chart that shows the trend in the ERC-20 stablecoins Exchange Reserve for Binance:
The value of the metric appears to have been sharply climbing in recent months | Source: CryptoQuant
As displayed in the above graph, the stablecoins Exchange Reserve for Binance has registered a rapid increase to a new all-time high (ATH) recently. The peak in this spike came ahead of BTC’s top, implying it was the buying from these stablecoin holders that played a role in the run.
The supply on the platform has declined since the peak, but the drop has only been slight so far, meaning there may still be plenty of fuel waiting to be deployed into BTC and others.
Related Reading: Bitcoin Smart Money: Analyst Reveals How Bitfinex Whales Signal Market Moves
The trend isn’t exclusive to Binance, either, as another analyst has pointed out in a Quicktake post that the combined stablecoins Exchange Reserve for all platforms has also spiked recently.
The trend in the 20-day and 100-day moving averages of the indicator | Source: CryptoQuant
BTC Price
At the time of writing, Bitcoin is trading around $92,400, down over 1.5% in the last seven days.
The price of the coin has been stuck in a downward trajectory recently | Source: BTCUSDT on TradingView
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
Data shows the stablecoin reserve on Binance has shot up to a new record recently, a sign that could be bullish for Bitcoin and other coins.
Stablecoin Exchange Reserve On Binance Has Seen Rapid Growth Recently
As explained by an analyst in a CryptoQuant Quicktake post, the stablecoin Binance reserve has shot up recently. The on-chain indicator of relevance here is the “Exchange Reserve,” which measures the total amount of a given asset that’s sitting in the wallets of one or more centralized exchanges.
When the value of this metric goes down, it means the investors are depositing a net amount of the token to these platforms. Such a trend implies there is demand in the market for trading away the cryptocurrency.
Related Reading: Ethereum Overtakes Bitcoin: Data Shows ETH HODLing Sentiment Stronger Than BTC
For volatile assets like Bitcoin, this kind of trend can have a bearish effect on their prices. In the case of stablecoins, though, the same doesn’t hold true as their prices are, by definition, stable around the $1 mark.
That doesn’t mean, however, that the selling of stablecoins is of no consequence for the sector. Investors generally store their capital in the form of these fiat-tied tokens when they want to avoid the volatility associated with BTC and others, but once they feel the time is right to buy back in, they make a swap using exchanges.
As such, stablecoin inflows into exchanges can be a bullish sign for volatile assets like Bitcoin, since they showcase that the investors are potentially interested in trading their stables in favor of these tokens.
On the other hand, the Exchange Reserve noting a decline implies the investors are withdrawing the asset into their self-custodial wallets, possibly to hold into the long-term. Once again, the trend is opposite between Bitcoin and stablecoins, with the former’s outflows being bullish and the latter’s bearish.
Now, here is a chart that shows the trend in the ERC-20 stablecoins Exchange Reserve for Binance:
The value of the metric appears to have been sharply climbing in recent months | Source: CryptoQuant
As displayed in the above graph, the stablecoins Exchange Reserve for Binance has registered a rapid increase to a new all-time high (ATH) recently. The peak in this spike came ahead of BTC’s top, implying it was the buying from these stablecoin holders that played a role in the run.
The supply on the platform has declined since the peak, but the drop has only been slight so far, meaning there may still be plenty of fuel waiting to be deployed into BTC and others.
Related Reading: Bitcoin Smart Money: Analyst Reveals How Bitfinex Whales Signal Market Moves
The trend isn’t exclusive to Binance, either, as another analyst has pointed out in a Quicktake post that the combined stablecoins Exchange Reserve for all platforms has also spiked recently.
The trend in the 20-day and 100-day moving averages of the indicator | Source: CryptoQuant
BTC Price
At the time of writing, Bitcoin is trading around $92,400, down over 1.5% in the last seven days.
The price of the coin has been stuck in a downward trajectory recently | Source: BTCUSDT on TradingView
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
