On-chain data shows ERC-20 stablecoins are currently seeing the highest number of exchange withdrawal transactions since May 2021.
In a new post on X, CryptoQuant community analyst Maartunn has shared about the latest trend in the Exchange Withdrawing Transactions for the Ethereum-based stablecoins. This indicator measures, as its name implies, the total number of transfers related to an asset or a group of assets flowing from wallets connected to centralized exchanges to self-custodial addresses.
Generally, investors take their coins into self-custody when they are planning to hold them in the long term, or at least, not immediately looking to trade them away. As such, a high value of the Exchange Withdrawal Transactions can be a signal that investors aren’t looking to sell the cryptocurrency right now.
Now, here is a chart that shows how the 30-day moving average (MA) of the stablecoin Exchange Withdrawing Transactions has fluctuated since 2020:
The 30-day MA value of the metric appears to have been climbing in recent months | Source: @JA_Maartun on X
As displayed in the above graph, the Exchange Withdrawing Transactions for the ERC-20 stablecoins has seen its 30-day MA value follow a sharp uptrend recently. This suggests an increasing amount of transfers are occurring to take stables away from the custody of exchanges.
If a volatile asset like Bitcoin were involved here, this trend would have naturally been bullish for its price. But as stablecoins have their price constant around a fiat currency, selling or buying doesn’t affect their price in the same manner.
Instead, what investors do with stables can have an effect on the volatile side of the market. When holders deposit these fiat-tied tokens to exchanges, it can be an indication that they are looking to buy into Bitcoin and other cryptocurrencies.
On the other hand, their shifting the coins away from exchanges can be a sign that they want to keep their capital still in the safety of the stablecoins for some period.
Following the recent rapid growth in the stablecoin Exchange Withdrawal transactions, its value has reached the 67,384 mark, the highest level since May 2021. This previous spike in May 2021 occurred as holders sold Bitcoin for stables during the infamous crash that month.
While the latest spike in the metric’s 30-day MA value is extraordinary in scale, it’s still just the first surge in demand for withdrawing stablecoins in the current cycle so far. The previous cycle witnessed several spikes of a similar scale before the music stopped for the bull run.
Bitcoin has seen another setback during the past day as its price has returned to the $110,900 level.
Looks like the price of the coin has retraced its recovery | Source: BTCUSDT on TradingView
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
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