Bitcoin Price Surge: USDT/Stablecoins Sitting in Exchanges Driving BTC – Analyst

Bitcoin’s network characteristics, along with the price, have seen tremendous growth in recent times. Currently, Bitcoin’s price is trading above 4x from the bottom at $3150 in December 2018. However, while the institutional demand has increased significantly, the demand for cryptocurrencies in exchange through FIAT is still low.

The 24-hour volume of USDT is also the highest among other altcoins. This suggests that the majority of the trading action on Exchanges is driven not by FIAT deposits but USDT.

tether volume
24-Volume for Bitcoin and Tether (Coinmarketcap)

According to a report emphasized by Mati Greenspan and published by CoinLib, majority of the inflection in Bitcoin at the moment is through USDT. While the channels for the US dollar are growing, the price still seems primarily driven by Exchanges.

coinlib source
Money Flow in Cryptocurrency markets (Source)

Furthermore, he also cited Google trends analysis results for ‘bitcoin.’ The charts suggested a significant discrepancy between the current demand the google search results. This essentially means that while the Bitcoin market is growing, it is primarily driven by the investors who had left the space in 2018 to invest in USDT. Mati Greenspan, the Senior Market Analyst att eToro noted in the blog post,

“There is fresh fiat coming in, but it seems that most of the action is coming from money that’s been sitting on the sidelines in stablecoins.”

Google bitcoin
Google Trends for the Keyword – Bitcoin (Source)

Nevertheless, the volume has been increasing considerably at CME for Bitcoin Futures. The volume on contracts for July is currently trading above $13,000 with a surge in volume. However, the rise Bitcoin can be stalled by a pullback cautioned Mati. He said,

“a massive bull market retracement of 20% or more is always a possibility. So, please trade with caution and always diversify your portfolio.”

bitcoin futures volume
BTC Futures/USD Daily Chart on CME (TradingView)

Hence, the rising institutional interest is evidently playing a role in the increase in Bitcoin prices. More platforms like Bakkt and Fidelity will provide Bitcoin trading services to the public. LedgerX also obtained a license to offer Bitcoin futures contract settling in actual Bitcoins. This is methodically similar to Bakkt and has many positive implications for Bitcoin.

Furthermore, traders are all looking forward to the meeting between the US President, Trump, and the Chinese counterpart Xi Jinping along the G20 Summit. They on-going trade war between the economic leaders is a worrisome factor for the entire world economy.

Do you think that institutional demand for Bitcoin is out-weighing the demand in Exchange? Please share your views with us. 

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