The stablecoin market capitalization is on the rise as USD Coin (USDC) deposits on exchanges reached a one-year high on Monday, June 24. Stablecoins play a key role in the ecosystem because they is a bridge from fiat currency to the market for traders in the cryptocurrency ecosystem.
Ki Young Ju, CEO and co-founder at CryptoQuant, noted that stablecoins have acted as buy-side liquidity, according to data from the blockchain tracker.
USDC net inflows into centralized exchanges hit a one-year high yesterday of $228M
People depositing stables to buy the dip? $BTC $ETH pic.twitter.com/oAwDv4O1dX
— Lucas (@LucasOutumuro) June 25, 2024
USDC deposits hit one-year high Bitcoin remains above $61,000 and altcoins have begun to recover from the recent price correction. Cryptocurrency traders are likely buying the recent dip in cryptocurrencies, according to data from IntoTheBlock.
Lucas Outumuro, Head of Research at IntoTheBlock, noted that USDC net deposits into centralized exchanges reached a one-year high on June 24 at $228 million. Outumuro asked, “Are people depositing stablecoins to buy into the sale?”
It is likely that stablecoin deposits into exchanges represent buyers lining up to buy the cryptocurrency during the sale. This theory is reinforced by Ki Young Ju’s recent tweet on X.
CryptoQuant co-founder noted that the stablecoin market cap is increasing, while its ratio to Bitcoin market cap is similar to previous all-time highs. This also applies to the reserve ratio on exchanges.
The two main indicators used to draw this conclusion are:
- Exchange stablecoin ratio, calculated by dividing Bitcoin reserves by all stablecoin reserves on centralized exchanges.
- Stablecoin supply ratio, calculated by dividing the market capitalization of Bitcoin by the market capitalization of all stablecoins.
The CEO concluded that stablecoins were being used as buy-side liquidity. He mentioned that the influx of new money is likely to fuel the next price increase.
Is it the right time to buy into the Bitcoin price drop?
The Bitcoin Market Value to Realized Value (MVRV) index is used to evaluate the tops and bottoms of the Bitcoin market and provides valuable information about the buying and selling behavior of traders.
The MVRV ratio over the 30-day timeframe has proven to be an effective indicator to identify an upcoming bounce in Bitcoin price. The following Santiment chart shows that the MVRV ratio fell below 8.4% on multiple occasions over the past year and a half, and Bitcoin price rose between 25% and 100% each time.
At the time of writing, the Bitcoin price is $62,170 and the MVRV rate is 9.69%. Therefore, based on the above observation, it is a good time for traders to buy into the Bitcoin price dip, according to on-chain data.
Bitcoin rose nearly 2% on Tuesday, but is down 7% over the past week.
Vuong Tien
According to Fxstreet
