Stablecoins and their activity have been largely overlooked in analyzing the movement of the crypto market. However, a new report by Santiment reveals that the activity of major stablecoins can indicate when the market is about to make a dramatic turnaround. The report highlights the correlation between the levels of $100k+ whale transactions of the six largest stablecoins and the movement of Bitcoin’s price.
The report shows that whenever there was a spike in whale transactions of stablecoins, there was a bounce in Bitcoin’s price. For example, the report highlights the biggest spike in Tether’s whale transactions on March 11th, which resulted in a significant increase in Bitcoin’s price. Similarly, on February 13th, Binance USD’s massive transactions led to a short-term recovery in prices.
The report also looks at the percentage of supply held by the top six stablecoins in terms of tiers holding $100k to $10m. The buying power of active traders is an essential indicator of how much buying power is available in the market. Santiment found encouraging accumulation signs from BUSD and DAI holders, while TUSD and USDP are moving down.
Finally, the report analyzes the Mean Dollar Invested Age of stablecoins, which reflects when older dormant addresses are waking up to make significant moves that can impact crypto prices. The report shows that TUSD and USDP have seen significant dormant movement, with a drop in USDP’s mean dollar age coinciding with Bitcoin’s bounce in early March.
Overall, stablecoin activity can be a helpful indicator of buying power in the crypto market. The report suggests that stablecoin buying power has been increasing even as Bitcoin whales continue to dump since mid-February. The report’s authors warn that the simultaneous dumping of Bitcoin and stablecoin whales should be cause for concern, indicating that big money is cashing out of crypto altogether.
Read more:
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