Data shows that Tether (USDT) and USD Coin (USDC) inflows have increased recently. Here’s why this could be relevant for Bitcoin.

Stablecoins are currently seeing higher than usual inflows

As CryptoQuant author Axel Adler Jr explains in a new post on X, the monthly average inflows of the two largest stablecoins, USDT and USDC, have been increasing recently.

The “exchange inflow” here refers to an on-chain indicator that tracks the total amount of a given asset being deposited into wallets linked to centralized exchanges.

When the value of this metric is high, it means that the exchanges are currently receiving a large number of deposits. Such a trend suggests that there is a demand among the holders to trade cryptocurrency.

On the other hand, the low indicator means that investors may choose to hold their coins as they are not making many transfers to the exchanges.

What these trends mean for the market, however, depends on the type of asset in question. Investors making deposits into volatile assets like Bitcoin could be a bearish sign for the price, as they may be making the transfers in order to sell.

In the case of stablecoins like USDT and USDC, while deposits could also mean that investors want to sell these tokens, such a sale would not impact their prices as they are inherently stable in value. That said, they are still relevant to the broader market.

Investors typically store their capital in stablecoins to avoid the volatility of Bitcoin and others. However, investors who store capital this way usually plan to dive back into the volatile side.

Thus, inflows from USDT and other stablecoins could mean that these investors waiting on the sidelines are ready to invest in BTC and the company. This swap could of course have a bullish effect on the prices of these volatile tokens.

Below is a chart showing the trend in the 30-day and 365-day moving averages (MAs) for combined USDT and USDC inflows into the exchange over the past few years:

The value of the metric appears to have been heading up in recent days | Source: @AxelAdlerJr on X

As the chart above shows, 30-day MA USDT and USDC exchange inflows rose to fairly high levels during Bitcoin’s rally towards a new all-time high (ATH). This suggests that there was significant buying demand for the assets.

During this rally, the indicator had set a new record of $72 billion in daily deposits. However, in the subsequent downturn, the metric had cooled significantly, but has recently been on the rise again.

So far, it has reached $53.8 billion per day, which is quite remarkable. If these new stablecoin deposits are indeed happening to buy into the volatile side, Bitcoin and others could see a bullish effect.

BTC price

Earlier in the day, Bitcoin had fallen below $58,000, but it appears to have rebounded and now surpassed the $60,000 mark.

Looks like the price of the coin has overall been moving sideways over the last few days | Source: BTCUSD on TradingView

Main image from Dall-E, CryptoQuant.com, chart from TradingView.com