Stablecoins sinking in spot exchanges, fuel for Christmas Bitcoin rally?

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On-chain data shows that the number of stablecoin transactions entering spot exchanges has increased recently, which could help fuel a Bitcoin Christmas rally.

Stablecoin deposits at spot exchanges have recently shown growing demand

As one analyst pointed out in an article on CryptoQuant, there has been a growing demand on spot exchanges recently. The relevant indicator here is “stable exchange deposit transactions”, which measures the total number of transfers involving these fiat-linked tokens that make their way to exchanges.

Investors typically use stablecoins whenever they want to escape the volatility associated with coins like Bitcoin. Once holders feel that prices are good to re-enter these volatile markets, they transfer their accumulated stables to exchanges to exchange for the desired cryptocurrency. Thus, a large amount of these tokens entering the exchange can act as buying pressure for other markets, and thus provide a bullish effect on the prices of Bitcoin and other assets.

Unlike the normal entry metric, which simply measures the total amount entering trades, this indicator gives an idea of ​​the real demand in the market since it counts individual transfers, which cannot be inflated by a few large investors. because their number of transactions will be much lower than their inflow values.

Now, here is a graph that shows the trend of this metric, as well as the opposite one that tracks withdrawal trades:

The value of the metric seems to have increased in recent days | Source: CryptoQuant

As the chart above shows, the stablecoin exchange deposit transactions metric has observed some growth recently, and at the same time, withdrawal transactions have been declining instead. This means that there is a demand to buy with stables at the moment, while there is not much interest in exiting volatile markets using these linked tokens.

Such a situation has been seen as bullish for the price of Bitcoin over the past few months, similar to previous examples of this trend in the chart display. “With the number of stablecoin deposits on the rise and the number of stablecoin withdrawals on the decline, the sellout events may be coming to an end,” the quant notes.

The analyst believes these inflows can fuel a fresh rally, saying “such a pick-up in retail investor sentiment could potentially lead to a Christmas rally.” It now remains to be seen whether these stablecoin entries will prove constructive for the price this time around or not.

Looks like BTC has been seeing a drop in recent days | Source: BTCUSD on TradingView

As of this writing, the price of Bitcoin is hovering around $16,900, down 1% in the past week.

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