Bitcoin is currently trading above $ 10,000, but is the latest move to five figures here to stay? Data suggests that this rally may have legs.
The leading cryptocurrency has failed numerous times in the past 12 months to keep earnings above the $ 10,000 mark. But this time may be different. Consider the flow of bitcoins and stablecoins into and out of cryptocurrency exchanges observed on Monday, suggesting the latest price cut could continue.
The inflow of bitcoins to exchanges rose 68,970 BTC to 130,039 BTC on Monday – the largest one-day rise in 134 days – as the cryptocurrency jumped over 10% to $ 11,315 to reach its highest level in nearly 12 months, according to Chainalysis, and company blockchain intelligence.
In other words, as the cryptocurrency rallied to multi-month highs, some investors shifted their coins to exchanges. Typically, investors transfer coins from their wallets to exchanges when they lack the confidence in the rally or the resources to hold coins in the long run and want to liquidate their investments.
As such, it can be argued that additional supply has spilled over to exchanges. While that may seem to be the case, the buying pressure, as represented by the inflow of the largest stable currency (USDT) to exchanges, has also strengthened.
Stablecoins are cryptocurrencies that peg their market value in some external direction, usually US dollars. Tether and other major stains are widely used to fund cryptocurrency purchases and their market capitalization has grown tremendously this year. Tether, the largest dollar-backed stable, crossed a $ 10 billion market cap earlier this month.
Tether inflows rose over 440 million USDT to 726 million USDT on Monday, in line with Chainalysis. “There was $ 726 million demand for bitcoin going into exchanges yesterday to balance $ 1.3 billion worth of bitcoin that was looking to sell,” Philip Gradwell, chief economist at Chainalysis, tweeted early on Tuesday.
And while the tether inflow is less than bitcoin, there are other ways to buy cryptocurrencies. “There will also be demand from fiat,” Gradwell noted.
So flows suggest that the buying pressure could be strong enough to absorb the extra supply that has come to exchanges and bitcoin may finally succeed in establishing a strong foothold above $ 10,000.
At press time, bitcoin was changing hands near $ 11,140, after experiencing dip demand with a drop to levels below $ 10,600 during European trading hours.