Stablecoin influx into cryptocurrency exchanges has surged as Bitcoin’s price saw a relief rally and approached $40k.
As Bitcoin joined the bullish streak yet again, the run has opened new doors for the stablecoin bunch. The dollar-pegged or asset-backed-tokens have gained much wider adoption in recent times as their importance has gained prominence amidst the continued volatility in the market which brought about the need for lower volatility crypto-assets.
According to the crypto analytical platform, Santiment, these pegged crypto-assets have continued to have larger and larger ratios of tokens moving to several cryptocurrency exchanges. Tokens such as USDC, TUSD, and SAI have especially mirrored the proportion of its tokens moved to exchanges as Bitcoin’s price has surged.
Why now?
If the factors such as individual and institutional interest go, the case for a wider blockchain and crypto-asset adoption and investment is inevitable. Moreover, taking into consideration the growing and expanding ecosystem, the potential market participants and users have strongly sought to gain exposure to this area, at the same time, there is also a push for less volatile, and more sophisticated, crypto investment options which has further helped pegged tokens to surge in market cap.
What Does Stablecoin’s Resurgence Mean For Bitcoin?
According to data from CryptoQuant, stablecoin deposits was first noted around the 13th of January when Bitcoin’s price saw a noticeable spike after trading in the red zone. Along with it, the cryptocurrency market also showed signs of recovery. Hence, the latest trend was indicative of significant buying pressure for Bitcoin as well as altcoins. This also meant that the investors bought the dip as depicted by the rising stablecoin inflow.
This is evident because traders tend to use stablecoins such as Tether [USDT] or USDC etc., rather than fiat since these are pegged to the value of fiat which makes it tradable across exchanges. The demand for stablecoins has increased magnificently over the past weeks. Leading the pack was USDT with a market cap of more than $24 billion as whales and high-net-worth investors jumped in to stack millions of dollars worth of Bitcoin.