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Is Another Bitcoin Rally Coming Soon? This Pattern May Say So

On-chain data shows a pattern in the stablecoin shark and whale holdings that may suggest the Bitcoin rally could make a return in the near future.

Stablecoin Sharks & Whales Have Been Accumulating Recently

According to data from the on-chain analytics firm Santiment, the sharks and whales of the major stablecoins have been increasing their reserves while Bitcoin has been struggling recently.

The “sharks” and “whales” are two of the largest cohorts in the sector, with investors belonging to the former holding at least $100,000 and at most $1 million worth of the asset, while the latter has wallet balances in the $1 million to $10 million range.

Due to such large holdings, these investors can potentially move around a large number of coins at once, something that can make them influential entities in the market.

In the context of the current discussion, the sharks and whales of stablecoins are of interest. In particular, the four largest players in the market are of relevance here: Tether (USDT), USD Coin (USDC), Binance USD (BUSD), and Dai (DAI).

Santiment has used its “Supply Distribution” metric to track the holdings of these humongous holders and this indicator tells us about the percentage of the supply that each group in the market is holding right now.

Here is a chart that shows the trend in this metric specifically for the sharks and whales of the top 4 stablecoins in the sector:

Stablecoin Sharks & Whales

As displayed in the above graph, the holdings of these stablecoin sharks and whales have been on the rise recently. Interestingly, while this trend has formed, the price of Bitcoin has dipped below the $30,000 level.

A similar pattern in the supply held by these large investors had also formed last month, as these investors had been buying more stablecoins, while BTC had been on a decline.

What followed this period of accumulation back then was a sharp Bitcoin rally that had taken the cryptocurrency’s price above the $30,000 level.

An explanation of this curious trend may lie in what the holdings of these large stablecoin holders signify. Generally, these investors opt for stables whenever they want to exit volatile assets such as BTC.

Such holders, however, usually only seek to temporarily take shelter in these dollar-tied tokens, because if they wanted to stay away from the sector for extended periods, they would have exited through other means like fiat.

Thus, these investors would eventually shift their stablecoins into Bitcoin and others again, and with this exchange, provide a bullish boost to their prices. This is why the supply of these sharks and whales may be looked at as the available buying pressure that these humongous investors can put on the asset at any point they want.

From the chart, it’s visible that the BTC rally above $30,000 didn’t actually kick off from new money being pumped back into the asset by the sharks and whales, but rather the conversions that they made back into the asset, as their holdings decreased while the rally happened.

As the large investors of the major stables have again been accumulating recently, it’s possible that Bitcoin could see a bullish effect from this down the road once more, although it’s uncertain how long it may be before these investors deploy their stablecoins back into the market.

Bitcoin Price

At the time of writing, Bitcoin is trading around $29,300, up 1% in the last week.

Bitcoin Price Chart

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Sharks & Whales Accumulate Stablecoins, Why This Could Be Bullish For Bitcoin

Data shows the sharks and whales of the largest stablecoins have been accumulating, something that may turn out to be bullish for Bitcoin.

Sharks & Whales Have Been Loading Up On Stablecoins Recently

According to data from the on-chain analytics firm Santiment, the sharks and whales have recently improved their share of the total supply of stablecoins like USD Coin (USDC), Dai (DAI), and Binance USD (BUSD).

The relevant indicator here is the “Supply Distribution,” which tells us what percentage of a cryptocurrency’s total circulating supply is being held by which wallet group in the market.

Addresses are divided into these “wallet groups” based on the total number of tokens that they are holding at the moment. In the context of the current discussion, the 100,000 to 10 million coins cohort is of interest.

This group naturally includes the wallets of all the investors who are carrying a balance of at least 100,000 and at most 10 million tokens. As the assets in question here are USD-pegged stablecoins (meaning that their value is fixed at $1), the bounds of this range convert to $100,000 and $10 million, respectively.

As these amounts are massive, only the largest of the investors in the market would be sitting on these addresses. The sharks and whales are two such cohorts that are large enough to cover these wallets.

These groups can be quite influential in the market, as they have the power to move a notable amount of coins at once. Obviously, the whales would be the more important group of the two, as they are the larger cohort.

Now, here is a chart that shows the trend in the Supply Distribution of these sharks and whales for three of the most popular stablecoins in the sector:

Stablecoins Sharks & Whales

As displayed in the above graph, the supplies of these three stablecoins hit a low back in March, but have since then observed an increase. This means that sharks and whales of the respective tokens have been accumulating during this period.

Generally, investors use stables whenever they want to avoid the volatility associated with other assets like Bitcoin. So, sharks and whales picking up these coins can be a sign that they have been exiting the other assets recently.

Eventually, however, such investors who have taken safe haven in stablecoins may exchange these tokens back for the volatile coins, once they feel that prices are right to jump in.

Whenever these holders swap their stables, the prices of the assets that they are shifting into can naturally observe a buying pressure. This implies that the currently piled-up stablecoin supplies of the sharks and whales can be looked at as the potential dry powder that may be deployed into assets like Bitcoin.

In the last couple of weeks, the USDC, DAI, and BUSD supplies of these humongous holders have flatlined, meaning that they may have slowed down their exit from the volatile coins. If the trend now reverses and they start scooping up the other cryptocurrencies with their stables, BTC could possibly feel a bullish effect.

BTC Price

At the time of writing, Bitcoin is trading around $26,700, down 1% in the last week.

Bitcoin Price Chart

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Stablecoins Interest Spikes As Traders Look To Exit Market

Data shows there has been a large spike in interest around stablecoins recently, a sign that investors of Bitcoin and other assets may be looking to exit.

Stablecoins Have Observed A Sharp Rise In Social Volume Recently

According to data from the on-chain analytics firm Santiment, there has been a major uptick in the social volume of the stablecoins recently. The “social volume” refers to an indicator that measures the total number of social media text documents that are talking about a certain topic or term.

The social media text documents here have been collected by Santiment and include a variety of sources like Reddit, Twitter, Telegram, and other internet forums.

Something to note about the metric is that it only tells us about the unique number of such posts that are mentioning the given term at least once. This means that even if a thread includes several mentions of the topic, its contribution towards the social volume will still remain only one unit.

The social volume can provide insight into the degree of attention any particular coin is getting on social media platforms. Whenever this indicator’s value goes up, it means that the general interest in the asset among investors is rising currently.

Now, here is a chart that shows the 7-day change in the social volume for the various assets in the cryptocurrency sector (including the stablecoins):

Stablecoin and Bitcoin Social Volume

As displayed in the above graph, the social volume of a lot of the volatile assets has registered a negative 7-day change, implying that there is a lesser amount of discussion happening related to them right now as compared to a week ago.

Some of the assets like Bitcoin have seen a positive 7-day change in the metric, but the increase has only been minuscule for them, implying that their social volume is relatively unchanged.

Interestingly, while the volatile assets may have seen decreasing or sideways-moving social volumes, the stablecoins have seen a completely different trend with the metric; their social volumes have sharply surged in the past week.

USD Coin (USDC), which is the stablecoin second only to Tether (USDT) in terms of market cap, has seen an extraordinary rise of more than 300% in terms of this metric. This suggests that discussions around the coin have increased by more than 300% during the past week.

Tether itself has observed a positive 7-day change in the social volume of more than 30%, which, while much lesser than USDC’s, is still quite significant nonetheless.

Generally, investors use stables whenever they want to escape the volatility associated with the other coins in the sector. So, since the interest around these tokens has surged recently while the volatile cryptocurrencies have been seeing a red period, it would appear that holders may once again be seeking the safety of this stable form of digital assets.

BTC Price

At the time of writing, Bitcoin is trading around $27,300, down 2% in the last week.

Bitcoin Price Chart