With Tether’s dropping reserves having an impact on the price of Bitcoin, USDC fixed-climbing reserves backed by Coinbase can do the same.
According to the USDC hourly mean inflow charts, the inflows have increased incrementally on the exchange, based on data from CryptoQuant. This is directly linked to further price movement in Bitcoin as whales and institutions deposit. CryptoQuant CEO @ki_young_ju was the one to make this observation, arguing that the price of Bitcoin will likely rise whenever USDC whale deposits to Coinbase increase.
Coinbase USDC inflow mean (per hour) || Source: CryptoQuant
Coinbase’s institutional affiliation has become more apparent since early 2020, a time when the exchange closed several OTC deals. OTC transaction volumes are under the hood, but there are indicators on the chain to estimate the size of these deals.
Based on these indicators, huge OTC bargains may still be ahead. Potential institutional buying can push inflows higher. In fact, just a few weeks ago, we saw huge BTC outflows on Coinbase, outflows that were an internal shift from Bitcoins to cold storage. Taken together, the decline in Bitcoin liquidity and USDC’s increasing inflows could build a bullish scenario for the price of Bitcoin.
According to Ju, for the most part, Bitcoin bull run never stops as long as OTC indicators still say institutional buying. In light of the same, is it possible that USDC inflows will increase sales pressure? Perhaps.
Other factors such as institutional activity on other spot exchanges and Open Interest in Bitcoin on top derivatives exchanges may indicate a correction. Just as Tether inflows increase sales pressure on Bitcoin, the same can be said for USDC as well. An institutional sales wall combined with a growing inflow of USDC may be the recipe for curbing Bitcoin prices.
USDC’s growth has led analysts to compare to Tether, and its market capitalization has risen 10% week after week. In addition, Visa’s partnership with Circle allows its users to send and receive USDC payments. Greater access to USDC would generate higher demand, which equals higher supply and this could support Tether in triggering the volatility in the price of Bitcoin.
Trading above $ 18,000 for several weeks before the discovery of a new rally delayed the Bitcoin price rally, however, the boost from USDC backed by Tether and Coinbase may push the price of Bitcoin higher in the short term.