Stablecoin deposits fall, withdrawals rise: Analyst warns of possible consequences for Bitcoin

Stablecoin deposits fall, withdrawals rise: Analyst warns of possible consequences for Bitcoin

Deposits on stablecoin exchanges have remained low recently while withdrawals have increased. This could indicate that Bitcoin is at risk, according to an analyst at CryptoQuant. The “Stablecoin Exchange Withdrawal Transactions” and “Stablecoin Exchange Deposit Transactions” metrics track the number of withdrawals and deposit transfers from ERC-20 stables, respectively. If withdrawal transactions are high, it could indicate that holders are exchanging their coins, such as Bitcoin, for stablecoins.

On the other hand, high deposits could indicate that investors want to buy volatile assets. In this case, Bitcoin and other cryptocurrencies could see an upward push. However, a chart from CryptoQuant shows that only one of these metrics has had a high value recently. Deposits have been relatively low, suggesting that there may not be enough demand to convert stables into other assets at the moment.

The analyst also highlights other similar cases in the past. It appears that BTC price generally increases following a surge in stablecoin deposits while withdrawals are low. However, there has been only an increase in stablecoin withdrawals recently, suggesting that investors are taking these tokens away from exchanges and likely holding them in self-custody for the longer term.

With no deposits to counteract this, BTC price has been struggling recently. If this trend continues and more stablecoin withdrawals occur, the cryptocurrency could take a hit in the short term.

At the time of writing, Bitcoin is trading at around $30,200, up 1% over the last week. However, it remains to be seen how stablecoin deposits and withdrawals will perform and how this will affect the Bitcoin price.