Is a new rally brew $ 38K in the form of bitcoin and stabilizes ‘flood’ exchanges?


Bitcoin (BTC) price increased its recovery on January 14, reclaiming the $ 38,000 level. What’s more, the weekly candle has now gone green for the fifth consecutive week despite a 28% crash earlier this week.

BTC / USD Weekly Candle Chart (bitstamp). Source: Tradingview

Meanwhile, according to data from CryptoQuant, cryptocurrency exchanges are flooding fixed currency deposits. This flow can act as a short-term catalyst for bitcoin as it suggests that the sideline capital is coming back to BTC.

Stable stock inflows on exchanges. Source: cryptocurrency

Why are stable stocks due to strong buyer demand for bitcoin?

In the cryptocurrency market, many traders sell crypto assets such as bitcoin, in stable stocks rather than cash.

Stablocks, such as Tether (USDT), are pegged to the value of the US dollar and are tradable on exchanges.

Most exchanges have a complex requirement of Know Your Customer (KYC) verification process for bank transfers, and it can take a long time to deposit cash in exchanges.

For example, if a whale or a high-net-worth investor wants to buy and sell millions of dollars of bitcoins, then Statsbox can be far more convenient than cash.

High demand for stable stocks from traders has boosted Teether’s valuation in recent months. Last month, Teether’s market cap crossed $ 20 billion. A month later, the number is already above $ 24 billion, indicating an increase in capital bypassing the cryptocurrency market.

Dry powder

Meanwhile, the fixed currency has increased significantly in the exchanges in the last 24 hours. Cryptocurrency tracks the purse of exchanges and looks at fixed currency deposits and outflows.

Fixed currency reserves of exchanges. Source: cryptocurrency

Apart from the major exchanges, fixed currency deposits were clearly visible on 13 January, just as bitcoin prices started recovering.

On January 13, the price of bitcoin was reduced to $ 32,500 after a futures contract of about $ 1 billion.

Investors were actively buying dips, given the rise in stable deposits and the growing open interest of the bitcoin futures market. As a result, bitcoin saw a quick turnaround, a rally of over 10% overnight.

Bitcoin futures open interest. Source: Bybt.com

So what comes next?

Alex Saunders, a cryptocurrency analyst, said These stable stocks are “flood exchanges”, often indicating a bullish trend.

Prior to the recovery, full-time trader Michael van de Popi on the Amsterdam Stock Exchange said that there is an all-time high probability for bitcoin if it again exceeds $ 38,000.

Overnight, the price of bitcoin was pierced through the $ 38,000 resistance zone, which Van de Poppe pointed out. Therefore, in the short term, BTC is on track to reclaim its record-high. that said:

“Bitcoin has not changed much. It dropped the $ 33,000 level for support and is therefore eager to test the $ 37,000-38,000 level. That needs to do a flip. If this happens, we will be eager for a new all-time high. If not, more consolidation is likely. “

The Bitcoin rally also coincides with the opening of Grayscale’s products on 13 January. If the value of bitcoin continues to rise, it may inspire more institutionalized and accredited investors to gain exposure to BTC through the Grayscale Bitcoin Trust (GBTC).

A strong argument is also being made that the reopening of GBTC will begin to gain momentum in the rally, indicating that the uptrend is led by institutions, not retail investors.