On-chain data shows stablecoin reserves have recently observed a rise in their value as Bitcoin short-term holders take profits.
Bitcoin Short-Term Holders Put Profits Into Stablecoins
As pointed out by a CryptoQuant post, the stablecoin reserves have been going up as some BTC short-term holders are realizing their profits.
The “stablecoins reserve” is an indicator that measures the total amount of stablecoins currently stored in exchange wallets. The metric takes into account for all kinds of these fiat-tied tokens.
When the value of this indicator moves up, it means investors have started to pull out of volatile markets like Bitcoin, and are storing their assets in the form of stablecoins. This type of behavior may be seen when holders have started to realize profits.
On the other hand, when this reserve moves down, it may imply that investors are now taking their stablecoins and putting them back into volatile markets. This trend usually follows a dip in the price of a crypto like BTC. Holders withdrawing their stablecoins into fiat will also be registered as a decline in the indicator.
The value of this reserve is also associated with buying power as holders usually use these to purchase other coins like BTC or ETH. So, low values indicate less buying power, and vice versa.
Now, here is a chart that shows the trend in the value of the stablecoins reserve over the last couple of months:
Looks like the indicator has spiked up recently | Source: CryptoQuant
As you can see in the above graph, the stablecoins reserve has increased in value recently. This has been accompanied by a drop in the price of BTC, which suggests that some holders have taken profits. It’s likely that this profit-taking is from short-term holders who bought in at the lower price levels.
The chart also shows the stablecoin inflows, an indicator that tell us the total amount of these coins moving into exchange wallets. As expected, the metric also had some spikes recently.
High values of the stablecoins reserve have usually been bullish for the price of Bitcoin as investors usually make use of these coins to buy back into the crypto during price falls.
At the time of writing, Bitcoin’s price floats around $50.8k, up 10% in the last seven days. Over the past month, the crypto has lost 6% in value.
The below chart shows the trend in the price of BTC over the last five days:
BTC's price has mostly moved sideways in the last few days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com