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Is a new rally coming up as bitcoin regains $ 38K and stable coin exchanges?



The price of bitcoin (BTC) extended its recovery to January 14, restoring the level of 38,000 dollars. Moreover, the weekly candle has already turned green for the fifth consecutive week, despite a 28% collapse earlier this week.

BTC / USD Weekly candle chart (Bitstamp). Source: Tradingview

Meanwhile, stable deposits are flooding cryptocurrency exchanges, according to data from CryptoQuant. This inflow may act as a short-term catalyst for bitcoin, as it implies that capital that is on the side is returned to the BTC.

Inflow of stable coins on the exchanges. Source: CryptoQuant

Why are stable coins indicative of strong demand for bitcoins from buyers?

In the cryptocurrency market, many traders sell crypto assets, such as bitcoin, on stable coins rather than money.

Stable coins, such as the Tether (USDT), are pegged to the value of the US dollar and traded on exchanges.

Most exchanges require a complex “Know Your Customer” (KYC) verification process for bank transfers, and cash deposits on exchanges can take a long time.

As such, if a whale or high-net investor wants to buy and sell millions of dollars worth of bitcoins, stable coins can be much more convenient than cash.

High demand for stable coins from retailers has led to an increase in Tether’s appreciation in recent months. Last month, Tether’s market capitalization exceeded $ 20 billion. A month later, that number is already over $ 24 billion, indicating an increase in foreign capital in the cryptocurrency market.

Dry powder that moves to the stock exchanges

Meanwhile, stable deposits on stock exchanges have increased significantly in the last 24 hours. CryptoQuant tracks stock portfolios and monitors stable deposits and outflows.

Reserve on stable stock exchanges. Source: CryptoQuant

Stable currency deposits jumped significantly on major exchanges on January 13, just as the price of bitcoins began to recover.

On January 13, the price of bitcoins fell to $ 32,500 after the liquidation of futures contracts worth nearly $ 1 billion.

Investors were actively buying the decline, as evidenced by the increase in stable deposits and the growing open interest in the bitcoin futures market. As a result, Bitcoin saw a rapid turnaround that picked up more than 10% overnight.

Bitcoin futures are attracting interest. Source: Bybt.com

So what’s next?

Alex Saunders, a cryptocurrency analyst, said stable coins are “flooded exchanges”, which is often indicative of a bullish trend.

Prior to the recovery, Michael van de Pope, a full-time trader on the Amsterdam Stock Exchange, said it was the highest bitcoin record if it again exceeded $ 38,000.

Overnight, the price of bitcoin broke through the $ 38,000 resistance zone, which Van de Pope determined exactly. Therefore, in the short term, BTC is about to test its record highs. He said:

“Bitcoin hasn’t changed much. He has moved the $ 33,000 maintenance level and is therefore willing to test the $ 37,000 to $ 38,000 level. This one needs to be reversed. If that happens, we will be eager for new all-time records. If not, it’s probably more consolidation. “

The Bitcoin rally also coincided with the unveiling of Grayscale products on January 13. If the value of Bitcoin continues to rise, this may encourage more institutional and accredited investors to gain exposure to BTC through the Grayscale Bitcoin Trust (GBTC).

There is also a strong argument that the resumption of the GBTC started the rally as a start, which means that the uptrend is driven by institutions and not by retail investors.