Stablecoins and their impact on the crypto market: What can these metrics say about Bitcoin’s next price movement?

Stablecoins and their impact on the crypto market: What can these metrics say about Bitcoin’s next price movement?

Stablecoins: Possible factors influencing the crypto market

Bitcoin has seen a series of fluctuations in recent days, with the price ranging from $29,700 to $31,100. There are several reasons to be optimistic that this resistance could soon be broken. One factor that is often overlooked is the behavior of stablecoins. In particular, Tether (USDT) and USD Coin (USDC) have historically shown interesting correlations, suggesting that the entire crypto sector may be impacted.

An important indicator is the “Average Age of the Dollar Invested” (Mean Dollar Invested Age). This indicator describes the average age of all coins/tokens on the blockchain, weighted by the purchase price. If the average age of coins decreases, this suggests that inactive coins are being activated to further increase prices.

It is particularly interesting to observe the behavior of wallets with holdings of $100,000 to $10 million in stablecoins. These so-called “shark and whale positions” can influence the crypto market. There are several ways to interpret the behavior of these wallets: If stablecoins are falling and BTC prices are rising, this may indicate that major players are converting their stablecoins into Bitcoin to drive up the price. On the other hand, if stablecoins rise and BTC prices fall, this may mean that these players sell their BTC and invest in stablecoins. If both stablecoins and BTC prices are rising, this suggests that more fiat is flowing into the market and prices could rise without the help of shark and whale stablecoin investments. If both stablecoins and BTC prices fall, it may indicate that cryptocurrencies are being sold and removed from the crypto sector.

Another indicator is the percentage of stablecoin holdings that are on the exchanges. If inventories move quickly, it can be a sign of where crypto prices will move. In the case of USD Coin, it was observed in March that stocks were moved on the exchanges shortly before the price rose.

You can also take a look at the largest stablecoin wallet addresses. If large amounts of stablecoins flow into these wallets, it could be a sign of things to come.

Analyzing stablecoins may seem boring at first, but anomalies in these metrics can be important signals for the crypto market. In particular, Tether (USDT) and USD Coin (USDC) have shown in the past that they can influence the market.

This article was first published on Santiment.net.