In just three months, the USDT supply ratio on cryptocurrency exchanges experienced a dramatic increase. Between May and late July, the space tracked this evolution during two crucial phases of the cryptocurrency markets. Moments like the time of the Crypto Winter’s coldest touch and the market’s sluggish comeback. The rise in the percentage of USDT supply on exchanges sends two important signals.
The proportion of the total supply of USDT on exchanges has more than doubled since May, as reported by Sentiment; on May 9, the percentage in the neighborhood was 19.7%, but has now risen to 42%. The graph also shows growth that was documented especially around the time of the market downturn in June. This could be a sign of an investor’s decision to surrender or a decline to buy.
“The surge could indicate an interest in institutional and retail investors to enter the markets, with a recovery in sight. This translates to a high in buying power that was last seen in early 2020.”
Most of the investors would now like to make money from the impending bounce as the market is showing signs of recovery. As a result, they will try to boost their stablecoin holdings as they prepare to break some deals. Since USDT is the preferred stablecoin, its supply ratio on exchanges can increase dramatically.
On the other hand…
On the flip side, this spike can be an indication of a wave of market participants taking profits. As a result, all assets, including Bitcoin, Ethereum, and others, fell to alarming levels. Particularly ETH plunged to three figures, and BTC dropped below $18,000.
At this point, many investors traded to buy the dip, while others hoped for a recovery. The long-awaited comeback finally happened in July, albeit on a smaller scale. Despite occasional bumps, slight corrections continued throughout August.
