Whales’ stablecoin buying power increased 7% in a month: What it signifies

Whales holding between $10,000 and $10 million in USDT added $1.06 billion in Tether to their wallets during the last month, increasing their purchasing power by 7%.

Bitcoin’s (BTC) price battled over the weekend to break over the $40,000 barrier level and is currently trading slightly around $38,000. At a time when Bitcoin is trading at a 40% discount to all-time highs, whales have begun amassing stablecoins.

According to Santiment data, stablecoin whales with wallet holdings of 10,000 to 10 million Tether (USDT) have amassed more than $1 billion in purchasing power in the last month. The research suggests that these whales’ purchasing power surged by more than 7% in just one month.

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Stablecoins’ purchasing power is defined as their ability to purchase Bitcoin, hence driving its price higher. When the price of Bitcoin is low, the stablecoin supply can acquire a greater share of the circulating BTC supply, causing the price to rise and hence purchasing power to increase, and vice versa.

The massive stockpiling of stablecoins by whales implies they are waiting for a cheaper BTC price to acquire, indicating a bullish market view. Additionally, the exodus of BTC from exchanges corroborates this sentiment. Over the last 26 weeks, there has been a greater flow of BTC supply away from exchanges than onto them in 21 of those weeks.

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The close association between Bitcoin and the S&P 500 has also been cited as a factor in Bitcoin’s current lacklustre price movement, while gold surged to a multi-week high. However, the price momentum is very similar to that of the first half of 2021, when gold outperformed BTC for the first two quarters while BTC maintained a strong link with the equity market.

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By the third quarter, BTC had broken free of the stock market’s linkage and risen to new highs, while gold sank to new lows.


Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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