On January 17th, Bitcoin (BTC) experienced a surge, reaching a peak of $105.8k. This rapid increase in the value of the top cryptocurrency coincided with a decrease in stablecoin inflows to exchanges.
According to insights shared on CryptoQuant, there has been a noticeable uptrend in stablecoin inflows to exchanges starting from January 13th. Concurrently, the price of Bitcoin has been on an upward trajectory during this period.
While this uptrend may seem positive in the short term, it might be worth investigating whether there are any recurring patterns from previous bullish cycles. CryptoCrypto has also examined the growth of the total market capitalization in relation to stablecoin inflows.
November Witnessed a Surge in Stablecoin Inflows, Though the Pace Has Slowed Down
The 7-day simple moving average was utilized to smoothen out the data on stablecoin exchange inflows, unveiling a series of spikes occurring from 2021 to 2023. These spikes reflect increased stablecoin inflows into exchanges.
A surge in inflows typically indicates a bullish market sentiment, suggesting greater buying power. Conversely, a decline in inflows may signal bearish market conditions.
The 7DMA peaked notably in November post the 2024 U.S. presidential election and maintained this high level for almost a month before declining from the second week of December onwards.
Despite short-term inflows, the prevailing trend over the past six weeks has not been favorable for buyers.
When comparing stablecoin inflows with the total cryptocurrency market capitalization, the bull run that commenced in 2021 reached its peak in November of the same year. Despite subsequent price corrections, the inflows data displayed significant upward movements in 2022 and March 2023.
Thus, it becomes apparent that the inflows metric does not singularly dictate the direction of the entire cryptocurrency market. Moreover, the inflows encompass newly created stablecoins flowing into exchanges, depicting a consistent upward trend over time.
In essence, the recent uptick in stablecoin flow is encouraging. Nevertheless, to sustain the market rally, it is imperative to reverse the downtrend observed since December.