As the prices of Bitcoin and Ether continue to rise, the movements of stablecoins can provide insights into the duration and extent of this surge. On Thursday, Bitcoin and Ether experienced a slight decline of -0.63% and -0.70%, respectively, before showing a modest recovery. Trading volume remained stable throughout the day. Investors in Bitcoin and Ether may take a moment to assess the evolving landscape following the substantial growth of these assets by 18% and 14% since June 15.
Among the macroeconomic data released, initial jobless claims had the potential to impact the market, although the numbers exceeded expectations only slightly and were insufficient to drive significant price movements. In the week ending June 17, 264,000 Americans filed for unemployment, slightly surpassing the forecasted 260,000.
However, recent movements in stablecoins, which often provide valuable insights into market trends, may have a more immediate impact and potentially foreshadow the future price trajectory of cryptocurrencies. According to Glassnode, an on-chain analytics firm, the total stablecoins held in exchange addresses have increased by 5.6% since June 14, ending a previous 60% decline that began in December.
Stablecoins serve as a means to acquire other crypto assets, and an increase in stablecoins being sent to exchanges indicates a rise in buying power and bullish sentiment. The growth in exchange stablecoin balances can be likened to an increasing number of people standing in line to cast their votes, representing buyers’ preference for the cryptocurrency they intend to exchange their stablecoins for.
Although the aggregate net supply position change of stablecoins remains negative, measuring the 30-day change of stablecoins across blockchains, the recent increase suggests an area worth monitoring for crypto investors. When the change in supply rises, the figure becomes positive, akin to the number of eligible voters. As investors acquire more stablecoins, this figure increases, indicating a potential surge in demand.
Additionally, stablecoin exchange buying power has shifted from a six-month trend of negative figures to positive territory. This metric gauges the flow of stablecoins onto exchanges compared to that of Bitcoin and Ether. The shift to positive figures suggests an increase in stablecoin buying power. The valuation of Bitcoin and Ether relative to stablecoins may be currently undervalued.
The combination of the first and third metrics reveals a gradual rise in demand, coinciding with favourable valuations for Bitcoin and Ether. An upturn in the second metric would indicate an influx of capital seeking to take advantage of these attractive valuations.