Why surge in BTC and USDT’s flows to exchanges should concern you

Journalist

Posted: December 13, 2023

• The surge in BTC’s and USDT’s supply on exchanges presents contradicting trends
• BTC miners have increasingly sold some of their holdings since 1 December

Following an extended period of rally, the general market is currently marked by volatility. Due to this, two contradicting trends in the activities associated with Bitcoin [BTC] and stablecoin USDT have emerged.

What are these trends?

BTC’s key volatility markers have risen over the last few weeks, suggesting that the leading coin is prone to price swings. For example, its Average True Range has risen by 32% since 3 December. Likewise, within the same period, its Bollinger Bandwidth (BBW) has risen by over 250%. 

The values of these indicators suggest that BTC’s price has become more volatile since December began. Hence, the hike in the coin’s supply on exchanges.

Source: TradingView

With the positive sentiment trailing BTC beginning to wane, the past few weeks have seen an uptick in the amount of BTCs sent to exchanges. Since 5 December, BTC’s exchange reserve has risen steadily. With a reading of 2.03 million BTC at press time, the amount of BTC held across exchanges has since grown by 5%.

Source: CryptoQuant

A hike in BTC’s exchange reserve indicates a growing potential for sell pressure in the market. In a volatile market, it means that investors are cautiously moving their holdings back to exchanges, indicating a degree of uncertainty and potential for selling.

Interestingly, as BTC’s supply on exchanges grows, there has been a steady increase in stablecoin USDT’s presence on exchanges as well. In fact, on-chain data provider Santiment revealed that in the last six months, it has appreciated by 7%. According to the same, since 30 November, USDT’s supply on exchanges has climbed by 29%.

Source: Santiment

Typically, this influx of USDT suggests that investors are accumulating and holding the stablecoin, potentially in anticipation of a bullish market upturn. However, the uptick in BTC’s exchange reserve points to uncertainty in the market as volatility spikes.

Are miners preparing for a price decline as well?

With Bitcoin trading at an 18-month high, miners have sent some of their BTC holdings to exchanges for onward sales. Since 1 December, BTC’s Miner Reserve has plummeted by 1% on the charts.

This metric measures the amount of coins held in affiliated miners’ wallets. Its value indicates the reserves that miners are yet to sell. At press time, this figure stood at 1.83 million BTC. Since the start of the month, miners have sold 5288 BTC. 

Source: CryptoQuant