Bitcoin Retail Investors To Start Buying Again? Proposal to increase TRC-20 USDT Reserves
The crypto market has been showing signs of recovery, with the price of Bitcoin trying to recover the psychological $70,000 a few days ago. Interestingly, recent on-chain data suggests that the crypto market may have the funds needed to restart.
Stablecoin Inflows Surge During Key Support Tests
In a recent QuickTake post on the CryptoQuant platform, market analyst CryptoOnchain revealed a dramatic increase in the balance of TRC-20 USDT on Binance, the largest cryptocurrency exchange by trading volume. Citing data from CryptoQuant data, an on-chain analyst revealed that USDT reserves increased from about $385 million on December 24 to about $5.2 billion as of February 21.
Most interestingly, this $4.8 billion vacuum in the stablecoin repository on Binance happened in less than a month.
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The crypto pundit highlighted that this significant increase in TRC-20 UDST reserves on Binance actually coincides with the price of Bitcoin and Ethereum approaching key support levels. This is usually a sign that demand is increasing and stalling activity is underway, both of which often lead to absorbing selling pressure.
In general, a significant increase in the accumulation of stablecoins in the exchange – especially during periods of price weakness – indicates that liquidity is being rotated, and not completely exiting the market. According to CryptoOnchain, this means that more money is set aside to re-enter the Bitcoin or Ethereum market (among other assets).
Use Points of TRC-20 in Increasing Retail Participation
The on-chain analyst also highlighted that the adoption of TRC-20 USDT is usually a characteristic of a certain category of investors, known as retail participants. It is also widely known that large institutions – usually not in a rush to buy fees – often use the ERC20 network.
Therefore, CryptoOnchain concluded that “the increase in TRC-20 reserves may indicate strong selling during the correction period.”
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Although stablecoin reserves indicate that market participants may be preparing for a bullish change in the price of Bitcoin, it is worth noting that a quick rebound is not guaranteed. This is because high reserves only reflect the presence of inactive demand (known as dry powder), rather than real demand.
However, if current market conditions should see stabilization in the near term, this “dry powder” waiting on the sidelines could quickly become fuel to drive prices higher. Furthermore, the virtual demand metric for Bitcoin has recently changed, suggesting that a reversal may be imminent.
As of this writing, Bitcoin is valued at around $67,971, showing significant movement over the past 24 hours.
Featured image from iStock, chart from TradingView
