When the Bitcoin price goes up, there are always interesting currency flows to observe. Especially where stablecoins are concerned things are a bit more complex than anticipated. Current exchange reserves for all stablecoins is a bit lower than most would assume.
Stablecoin Exchange Reserves and the Bitcoin Bull Run
For years now, there have been claims of how Tether’s USDT influences the Bitcoin price momentum. As the value per BTC rises, more USDT seems to enter circulation. During this most recent uptrend, that is clearly not the case. In fact, the overall exchange reserves for stablecoins are on the decrease, despite a small uptick in the past few days.
Taking the chart below as an example, there are some correlations between stablecoins and the Bitcoin price. If the exchange reserves are to be believed, a lower Bitcoin price yields a major influx in DAI, USDT, TUSD, USDC, et cetera. When the price rises, those reserves slowly begin tapering off until they hit an equilibrium of sorts.
Even during this recent uptrend for Bitcoin, there hasn’t been any notable increase in stablecoin exchange reserves. Supplies were much higher when Bitcoin was valued at $13,000 and $14,000 compared to the current value. That is a remarkable turn of events, all things considered, as it debunks one of the bigger myths in the crypto industry.
That being said, there is a notable uptick in exchange reserves for stablecoins the past day or two. This coincides with Bitcoin struggling to reach $19,000. In reality, there is no real price struggle going on. No market can keep rising forever without a breather along the way. Even so, it seems people are still intent on buying Bitcoin with their favorite stablecoin, which is a good sign.
USDT and USDC Reserves are on the Rise
Delving deeper into the current exchange reserves for stablecoins, the uptick seems primarily triggered by two assets. On the one hand, there is Tether’s USDT. More specifically, it is the USDT version adhering to the ERC20 standard. This is by far the most liquid version of Tether’s pegged currency, despite it being issued on nearly half a dozen blockchains today.
The other noteworthy contributor is USDC. Although it has been a quiet start for this stablecoin, it is making the rounds in the cryptocurrency world as of late. Several DeFi platforms support this currency as well, further creating demand for USDC. With its supply on exchanges now rising again, it is difficult to predict what will happen to Bitcoin and other altcoins.
It has to be said, fiat-backed currencies can be traded against most crypto assets today. An increase in exchange reserves for these assets will benefit most markets especially those with a lot of trading volume in place already. As such, it is possible there will be further price increases down the line. Nothing is ever guaranteed in this industry, though.