Bitcoin is currently trading above $ 10,000, but is it the latest five-figure move here to stay? The data suggests that this rally could have legs.
The leading cryptocurrency has failed multiple times in the past 12 months to keep earnings above the $ 10,000 mark. But this time it may be different. Consider the flow of bitcoins and stablecoins in and out of the cryptocurrency exchanges observed on Monday, suggesting that the latest price break may persist.
Bitcoin’s inflow into the exchanges increased by 68,970 BTC to 130,039 BTC on Monday, the biggest single-day gain in 134 days as the cryptocurrency jumped more than 10% to $ 11,315 to reach its highest level in nearly 12 months , according to Chainalysis, a blockchain intelligence company.
In other words, as the cryptocurrency rebounded to multi-month highs, some investors moved their currencies to the exchanges. Investors generally transfer coins from their wallets to exchanges when they lack confidence in the rally or the resources to hold the coins for the long term and want to liquidate their investments.
As such, one can argue that the additional supply has been poured into the exchanges. While that appears to be the case, buying pressure, represented by the influx of the largest stable currency strap (USDT) on exchanges, has also strengthened.
Stable currencies are cryptocurrencies that link their market value to some external reference, generally the US dollar. Tether and other major stablecoins are widely used to finance cryptocurrency purchases and its market capitalization has grown tremendously this year. Tether, the largest stable dollar-backed currency, crossed a market capitalization of $ 10 billion earlier this month.
Tether’s inflows increased by more than $ 440 million to $ 726 million on Monday, according to Chainalysis. “There was a demand for $ 726 million per bitcoin that went into exchanges yesterday to balance the $ 1.3 trillion worth of bitcoin it seeks to sell,” Philip Gradwell, chief economist at Chainalysis, tweeted Tuesday night.
And while the entry of the strap was less than that of bitcoin, there are other means to buy cryptocurrencies. “There will also be demand for the fiat,” Gradwell said.
Therefore, the flows suggest that buying pressure may be strong enough to absorb the additional supply that has hit the exchanges and Bitcoin may finally succeed in establishing a strong foothold above $ 10,000.
At press time, bitcoin was changing hands around $ 11,140, having tested the drop in demand with a drop to levels below $ 10,600 during European business hours.
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