The Bitcoin (BTC) price continued its recovery on January 14 and returned to the $ 38,000 level. In addition, the weekly light has turned green for the fifth week in a row, despite falling 28% earlier this week.
Meanwhile, according to CryptoQuant, stable currency deposits were poured into cryptocurrency exchanges. This influx can act as a short-term catalyst for Bitcoin, as it signals an unintended capital recovery in BTC.
Why do stack coins indicate a strong acquisition of bitcoin?
In the cryptocurrency market, many traders sell cryptocurrency assets such as Bitcoin for stack coins instead of cash.
Stable currencies such as the USDT are linked to the value of the US dollar and are traded on stock exchanges.
Most exchanges require a complex KYC verification process for bank transfers, and it can take a long time to deposit money on exchanges.
Therefore, if a whale or a wealthy investor wants to buy and sell bitcoins for millions of dollars, stable coins may be more suitable than cash.
High demand for stack coins from traders has pushed up the value of the tether in recent months. Tether’s market value exceeded $ 20 billion last month. One month later, the figure has already exceeded 24 billion dollars, which indicates an increase in case capital in the cryptocurrency market.
Transfer of dry powder to exchanges
Meanwhile, stable deposits on the stock exchanges have increased dramatically in the last 24 hours. CryptoQuant monitors wallets and monitors stable currency deposits and outflows.
On the major stock exchanges, stable currency deposits rose significantly on 13 January after the price of Bitcoin began to recover.
On January 13, Bitcoin’s price fell to $ 32,500 after nearly $ 1 billion in futures contracts were settled.
Investors have actively bought the downturn, which is reflected in an increase in stable deposits and an increase in open interest in the Bitcoin futures market. As a result, Bitcoin changed rapidly, rising 10% overnight.
So what’s next?
Cryptocurrency analyst Alex Saunders said that stablecoins “flood the stock markets”, which often indicates a trend.
Before recovering, Amsterdam Stock Exchange trader Michael Van de Pope said that if Bitcoin crossed $ 38,000 again, Bitcoin would probably have a record high.
Overnight, the Bitcoin price broke the $ 38,000 resistance zone set by Van de Poppe. Therefore, in the short term, BTC is on track to test its all-time high. He said:
“Bitcoin has not changed much. It has reversed the support level of $ 33,000 and will therefore test $ 37,000 to $ 38,000. It must be reversed. If this happens, we will aim for new record highs. If not, then consolidation is likely.”
The Bitcoin rally also coincides with the opening of the Grayscale product on 13 January. If the value of bitcoins continues to rise, this could force more institutional and accredited investors to access BTC through the Grayscale Bitcoin Trust (GBTC).
There is also a strong case that the opening of GBTC led to the rally, which means that the trend is led by institutions, not private investors.