According to on-chain data, stablecoin reserves have recently increased as Bitcoin short-term holders profit.
According to a CryptoQuant report, stablecoin reserves have increased as some BTC short-term holders realize their winnings. The “stablecoins reserve” is a metric that measures the total quantity of stablecoins saved in exchange wallets. The statistic takes into consideration all types of fiat-linked tokens.
When the value of this indicator rises, it indicates that investors have begun to withdraw from risky markets such as Bitcoin and are storing their assets in the form of stablecoins. This type of behavior may be observed when holders begin to realize profits.
When this reserve falls, it may indicate that investors are withdrawing their stablecoins and reinvesting them in volatile markets. This pattern frequently accompanies a drop in the price of a cryptocurrency, such as BTC. Holders converting their stablecoins to fiat will also cause a drop in the indicator.
The value of this reserve is also linked to purchasing power, as holders typically utilize it to purchase other coins such as BTC or ETH. As a result, low values suggest less purchasing power and vice versa.
Here’s a graph that displays the trend in the value of the stablecoins reserve over the previous few months:
The value of the stablecoin reserve has lately increased, as shown in the graph above. This has been accompanied by a reduction in the price of Bitcoin, implying that some holders have profited. This profit-taking is most likely the result of short-term investors who bought in at lower prices.
The figure also depicts stablecoin inflows, which are indicators of the overall amount of these coins entering into exchange wallets. The measure has recently experienced some surges, as expected.
High reserves of stablecoins have historically been positive for the price of Bitcoin since investors use these coins to reinvest in the cryptocurrency amid price drops. At the time of writing, the price of Bitcoin is hovering around $50.8k, up 10% in the last seven days. The cryptocurrency has lost 6% of its value in the last month.
The figure below depicts the price trend of BTC over the previous five days:
