On-chain data shows the USDC exchange reserves have started to trend downwards recently, a sign that buyers may be exchanging the coin for Bitcoin and other cryptos.
USDC Reserves On Exchanges Have Fallen Down Over The Past Few Days
As pointed out by an analyst in a CryptoQuant post, investors may have started to exchange their USD Coin for other cryptos like Bitcoin.
The “USDC exchange reserve” is an indicator that measures the total amount of the stablecoin currently stored in wallets of all exchanges.
When the value of this indicator goes up, it means the supply of the cryptocurrency on exchanges is observing an increase.
Investors usually convert to stablecoins when they want to exit volatile markets like Bitcoin. So, an increase in the reserve shows holders may be leaving BTC.
On the other hand, a downtrend in the metric suggests investors have started to either convert it to other cryptos or withdraw it to personal wallets.
Such a trend suggests that investors may be finding the current Bitcoin prices favorable for re-entry into the market.
This fresh buying from the stablecoin holders can therefore act as dry powder for propelling up BTC and other coins.
Related Reading | Bitcoin Spot Volume Soars, 7-Day Average Tops $10B
Now, here is a chart that shows the trend in the USDC exchange reserves over the span of 2022 so far:
The value of the indicator seems to have been falling recently | Source: CryptoQuant
As you can see in the above graph, the USDC reserve had been on the rise earlier this month as fear in the market rose up.
However, soon after the price of Bitcoin crashed down below $26k, the USD Coin reserve dropped off as investors exchanged their stablecoins to buy the dip.
This exchange of USDC to other cryptos seems to have continued even after BTC rebounded back above the $30k level again.
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If the downtrend in the reserve continues, it can serve as short-term support for the coin, and may even help push it to higher levels.
At the time of writing, BTC’s price is trading around $29.5k, down 1% in the last seven days. Over the past month, the crypto has lost 25% in value.
The below chart shows the trend in the price of the coin over the last five days.
Looks like the price of the coin has been moving sideways in the last few days | Source: BTCUSD on TradingView
Bitcoin has shown little activity in the past week as the crypto has been stuck in consolidation. Currently, it’s unclear when some real price action will be seen.
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com