Stablecoin Whales Archives

Bitcoin might not be able to observe any extended runs of bullish momentum until this on-chain indicator reverses its trend.

Stablecoin Whale Supply Has Dropped To Lowest In Six Months

During the past few days, Bitcoin has registered some rise and has managed to breach the $27,000 level. The asset has, however, been unable to build up any sustained moves above this mark so far.

The below chart shows how the cryptocurrency’s price has changed in recent days:

Bitcoin Price Chart

While moves above the level have all failed, the asset is still more than 3% up during the past week, which is more than some of the other top coins like Ethereum (ETH), Cardano (ADA), and Dogecoin (DOGE).

Now, as for whether Bitcoin can find a proper break toward higher levels, data from the on-chain analytics firm Santiment may provide some hints. The indicator of interest here is the combined percentage of the stablecoin circulating supply that’s being held by the whales.

Here is a chart that shows the trend in this indicator over the past year:

Stablecoin Whale Supply

The “whales” here refer to entities that are carrying at least $5 million in their addresses. These investors are among the largest in the market, so they can hold some notable influence.

From the graph, it’s visible that the total stablecoin supply held by these humongous holders has been on a net decline during the past few months. Following the latest drawdown in the metric, its value has hit 51.14%, which is the lowest observed since March 18th, about six months ago.

What Does This Mean For The Bitcoin Price?

Now, the main question is: what’s the relevance of this metric to Bitcoin? The answer to this question lies in the reason why these holders generally choose to hold stablecoins.

Investors may want to hold their capital in the form of these fiat-tied tokens whenever they intend to avoid the volatility associated with other assets in the sector like BTC.

Such holders are probable to return back into the market as if they were looking to completely exit the sector, they may have done so through outflows into fiat. Once these stablecoin investors find that the prices are right to jump back into the volatile side of the market, they swap their tokens for them.

This act of shifting naturally provides a buying pressure on the prices of the coins that they are moving into. Because of this reason, the stablecoin supply could serve as a measure of the potential dry powder available for Bitcoin and other cryptocurrencies.

As the whales are clearly the most significant entities in the sector, the stablecoin supply held by them is of particular importance. Generally, uptrends in BTC follow periods where the whales significantly shed their stable supplies, as it means that they are buying into the asset with them.

Examples of such a trend are visible in the chart, as this pattern formed both prior to the January rally and the rebound in June. These investors have been decreasing their supply recently as well, but as BTC has gone down in this period instead, it’s likely that this decline is coming from withdrawals into fiat.

A turnaround in this indicator may be the one to watch for, as it can be a sign of fresh capital injections into the sector. Perhaps only once the whales’ buying power would return to the same levels as it was earlier in the year when Bitcoin breached $30,000, the asset would be able to find a sustained upward move.

Whale Supply Of Stablecoins Could Hold Key To Bitcoin Rebound

In a recent post on X, the on-chain analytics firm Santiment discussed the percentage of the total stablecoin supply that the whales in the sector are holding right now.

The “whales” here refer to entities that are carrying at least $5 million worth of stablecoins in their addresses. Naturally, all stablecoins that are in circulation are included in this metric, regardless of their market caps.

“A tried and true method for predicting where crypto heads next is analyzing big wallets to see the ratio of stablecoins they hold,” explains the analytics firm.

Here is a chart that displays the data for the holdings of these humongous investors:

The reason that the stablecoin supply of this cohort may be relevant for the rest of the cryptocurrency sector is that it provides a look into the buying power available to these whales.

Generally, these holders use stables to store their capital away from the volatility of coins like Bitcoin, but once they feel that the time is right to jump back in, they deploy these fiat-tied tokens back into the other coins, providing a bullish boost to their prices.

This can be seen working in action in the chart as well. Back in May-June, these investors had been accumulating, and once their supply had hit a peak and they had started distributing instead, the Bitcoin price had observed a rally.

Given the close timing, it would seem likely that the whales had been shedding their stablecoin holdings in order to buy assets like BTC, thus acting as fuel for the uplift.

As displayed in the graph, the stablecoin holdings of the whales haven’t changed much recently, suggesting that these investors haven’t been taking part in either accumulation or distribution.

This could indicate that the whales don’t have any extraordinary buying capacity currently. An uplift in this indicator, however, would imply that the purchasing power of this cohort is going up, which could then lead towards a rebound for the rest of the market.

One positive sign forming in the market may be the fact that the market cap of the six largest stablecoins is slowly starting to turn around.

The combined market cap of these large stablecoins has been in a perpetual downtrend since early 2022, suggesting a constant drainage of capital from the sector. In the past couple of weeks, though, these fiat-tied assets have seen a combined growth of $663.2 million, which may be one of the early signs that a rebound could finally be taking place.

Such small rises in the metric have already been seen a few times during this downtrend, though, so this latest one might as well turn out to be a temporary deviation like those previous ones. If, however, this recent increase is indeed a sign that things are finally changing, then it would mean that the cryptocurrency sector is seeing some constructive growth at last.