Stablecoin Exchange Netflow Has Remained Positive Recently

On-chain data shows exchanges have continued to receive stablecoin deposits recently, a sign that could be bullish for Bitcoin and other digital assets.

The price of Bitcoin has seen a strong recovery during the last few days, and the asset is now just shy of the $100,000 level. Several factors could be contributing to this rally, and one of them might be the stablecoin exchange netflows.

Related Reading | TA: Bitcoin Price Surges Past $95,000 Resistance, Door Open For Fresh High?

As highlighted by an analyst in a recent post, stablecoins have been flowing into exchanges, and this could be a bullish sign for BTC.

Stablecoin Exchange Netflow Shows Inflows Continuing

As pointed out by the analyst in the CryptoQuant Quicktake post, stablecoins have been flowing into exchanges recently. The on-chain metric of relevance here is the “Exchange Netflow,” which keeps track of the net amount of a given asset that's moving into or out of the wallets associated with centralized platforms.

When the value of this metric is positive, it means the investors are making net deposits of the coin to exchanges. Such a trend suggests the holders want to trade the asset away.

On the other hand, the indicator being negative implies investors prefer to hold onto the cryptocurrency, as they are taking their tokens off into self-custody. The implication of these trends for the wider sector and the asset itself can be different depending on the exact type of coin that’s witnessing the outflows/inflows.

In the case of volatile assets like Bitcoin, a positive Netflow can be bearish for the price, as it means the holders are looking to sell. BTC also acts as one of the main transition points for capital in the sector as a whole, so it being sold can be a bad sign for the rest of the coins as well.

Stablecoin deposits also imply traders want to sell them, but since their price always remains stable around the $1 mark, the selling has no 'bearish' effect on them.

Like Bitcoin, the stablecoins act as a gateway for capital into the sector. More particularly, investors invest their money into the stables whenever they want to avoid the volatility associated with other assets.

Such holders usually eventually plan to delve into the volatile coins, and once they are ready, they transfer these fiat-tied tokens into exchanges to make the swap. This naturally acts as buying pressure for whatever asset that they are shifting to. As such, positive stablecoin Exchange Netflows are considered bullish for Bitcoin.

Now, here is the chart shared by the quant that shows the recent trend in the Exchange Netflow for the stablecoins:

The stablecoin exchange netflow has mostly been positive over the last few weeks, as highlighted by the graph. Bitcoin has been setting new record highs in conjunction with these inflows, so it's likely that these stablecoin deposits have been serving as fuel for the asset.

The indicator's value has remained strong recently, suggesting that investors may not be finished accumulating BTC. If the previous trend continues, the latest stablecoin inflows may extend the rally and eventually assist the asset in reaching the fabled $100,000 target.

Bitcoin Price

Bitcoin had seen a plunge under the $96,000 level yesterday, but it appears the coin has already bounced back as its price is now trading around $98,400.