High Stablecoin Inflows Fuel Bitcoin Rally
Despite a 0.5% pullback in the last 24 hours, Bitcoin (BTC) is still trading at $89,077, which is 4.5% below its all-time high of $93,434. However, optimism surrounding a potential crypto-friendly Donald Trump administration, rising stablecoin inflows into exchanges, steady inflows into spot Bitcoin exchange-traded funds (ETFs), and several on-chain indicators suggest that the bull market is not over yet.
Stablecoins Entering Spot Exchanges Act as Fuel in the Market
The influx of stablecoins into cryptocurrency exchanges has been a key driver of Bitcoin’s recent price rally. According to data from CryptoQuant, there has been a 17% uptick in Bitcoin’s price over the last seven days, accompanied by an influx of stablecoins into exchanges.
"The stablecoins entering spot exchanges act as fuel in the market," said pseudonymous CryptoQuant analyst, theKriptolik, in an insight note on Nov. 15. "This suggests that, barring any additional news flow, the Bitcoin bull market has not yet ended."
Historical Context: Stablecoin Inflows Precede Price Rallies
Historically, large-scale inflows of stablecoins into exchanges have preceded price rallies. For example, the 2021 bull run was preceded by an influx of stablecoins between September 2020 and February 2021.
Most recently, high stablecoin inflows into spot exchanges occurred between January and early March this year, resulting in a rally that saw Bitcoin’s price break previous all-time highs before the Bitcoin halving.
Demand for Bitcoin Remains High
The crypto community believes that Trump’s second term as president of the United States could usher in a new era for the crypto market. In a note to investors, QCP Capital expressed confidence that the underlying strength in Bitcoin represents a "systematic shift in the market in anticipation of Trump’s return to office."
QCP Capital’s Confidence in Trump’s Crypto-Friendly Policies
The crypto community is now looking forward to Trump’s fulfillment of his campaign promises and their possible implications, QCP Capital added. "His idea of launching a strategic BTC reserve and rotation from gold to BTC provides a strong narrative that keeps BTC prices supported."
Coinbase Premium Index Hits Highest Level Since April
Meanwhile, the Coinbase Premium Index, a metric that tracks the Bitcoin price difference between Coinbase and Binance, has hit its highest level since April. This indicates strong US demand for Bitcoin.
Investors Piling into Spot Bitcoin ETFs
Increasing demand is evidenced by massive inflows into US-based spot Bitcoin ETFs, with more than $4.7 billion being poured into these investment products after the US presidential election between Nov. 6 and Nov. 13.
BlackRock’s spot Bitcoin ETF (IBIT) accounted for 65.7% of these inflows, seeing more than $3.09 billion in net inflows over the same time period.
Bitcoin MVRV Ratio Indicates Reasonable Pricing
Despite Bitcoin’s sharp rally over the last seven days, key evaluation metrics indicate that BTC remains reasonably priced, raising optimism among investors of a continued upward move.
The market value realized value (MVRV) ratio is a metric used to indicate whether the price is overvalued or not. Data from CryptoQuant shows that Bitcoin’s MVRV ratio is currently at 2.5, which indicates BTC is not overvalued. This is below the critical overvaluation threshold of 3.5, which signals that the asset might be nearing a peak.
Onchain Realized Price Bands: A New Price Discovery Phase?
In addition to the MVRV ratio, the on-chain realized price bands add another layer of optimism to Bitcoin’s price trajectory. CryptoQuant’s Trader On-chain Realized Price Bands show that Bitcoin can potentially reach the upper band currently at $104,000 or higher soon.
The upper realized price band was last reached in March when Bitcoin reached its all-time high of around $73,835. This historical price action could mean that Bitcoin is poised for a similar upward movement, with the $100,000 level as a realistic target.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Explore more articles like this
Subscribe to the Markets Outlook newsletter to get critical insights to spot investment opportunities, mitigate risks, and refine your trading strategies. Delivered every Monday.
By subscribing, you agree to our Terms of Services and Privacy Policy