Stablecoin Movement May Hint Strongly at Asset Prices' Path Forward

As Bitcoin and ether continue their recent price increases, stablecoins may offer powerful hints into the duration and extent of the surge.

Bitcoin and ether prices stalled on Thursday, with the two assets falling -0.63% and -0.70% respectively at one point (ETH and BTC were more recently up slightly). Volume on the day has been stable. Bitcoin and ether investors may be pausing to evaluate the changing landscape after the two assets’ 18% and 14% growth since June 15.

Of the macroeconomic data points released today, initial jobless claims had the greatest potential for market impact, although the total was only minimally above expectations and not enough to move prices. In the week ending June 17, 264,000 Americans filed for unemployment, slightly above forecasts of 260,000.

Stablecoins moving to exchanges increase

Recent Stablecoin movement, which usually provides insights into market movement, may have a more immediate impact and foreshadow cryptos’ price path.

The total stablecoins on exchange addresses has increased 5.6% since June 14, according to on-chain analytics firm Glassnode. The increase ends a 60% decline that began in December.

Stablecoins are often a mechanism to acquire crypto assets. An increase in stablecoins sent to exchanges represents an increase in buying power, as well as bullish sentiment.

An increase in exchange stablecoin balances is akin to an increase in the number of people standing in line to vote. In this case, the vote being cast is for which cryptocurrency the buyer is looking to exchange their stablecoin(s).

Stablecoin supply across blockchains contracts.

The aggregate supply net position change of stablecoins is still negative. The aggregate supply net position change measures the 30-day change of stablecoins across blockchains (ethereum included).

When the change in supply increases, the figure is positive, and vice versa. The analogy in this case is to the number of eligible voters. As investors acquire more stablecoins, this figure will increase, and represents an area worth monitoring for crypto investors.

The net position change of stablecoins has been persistently negative since April 2022, after 20 months of positive readings.

Ultimately, stablecoin buying power is increasing

Stablecoin exchange buying power has ended a six-month trend of negative figures and moved into positive territory. This metric measures the change in stablecoin flows on to exchanges versus the flow of bitcoin and ether.

The return to green signals that stablecoin buying power is climbing. Bitcoin and ether’s valuation relative to stablecoins may be currently discounted.

The confluence of the first and third metrics shows a creeping increase in demand, occurring amid favorable valuations for BTC and ETH. An upturn in the second would signal that more capital has arrived to capitalize on these valuations.

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