Bitcoin can rise in the coming sessions.
So believes Ki-Young Ju, the chief executive officer at CryptoQuant, a South-Korea based blockchain analysis firm. The analyst tweeted right ahead of the US session open that stablecoins’ inflow into crypto exchanges is rising.
In retrospect, a stablecoin represents a digitized version of the US dollar. Its issuers supposedly maintain a pool of cash reserves and issue dollar-pegged digital tokens backed by it. The aim is to remove the necessary of having banking relations while getting in and out of a fiat-enabled crypto trade.
Bitcoin Bulls Active?
CryptoQuant studies stablecoin inflows and outflows across all the exchanges to understand the crypto market’s nerve. More stablecoins entering trading platforms signify buying sentiment. Similarly, more stablecoins leaving exchanges points to a brewing selling pressure.
On Thursday, the stablecoin inflow is comparatively higher.
The uptick occurs at the time when Bitcoin is trading above its psychological support level of $30,000. The cryptocurrency had slipped below the said price floor on Wednesday, but a higher buying pressure near it prompted a mild rebound.
As of Thursday, BTC/USD had established an intraday high of $32,000.
“People are depositing stablecoins to exchanges. You know what to do,” said Mr. Ju, pointing to a potential price rally ahead in the Bitcoin market.
The bullish on-indicator comes in contrast with a prevailing bearish pattern known as the Descending Triangle. Of late, Bitcoin is forming a sequence of lower highs while maintaining a price floor in the $30,000-31,000 range. Such a pattern has a higher likelihood of breaking lower.
“Technical target would be just below $28,000 I think,” said NebraskanGooner, a pseudonymous market analyst.
Meanwhile, a clear breakout above the 20-day moving average could push BTC/USD back towards $35,000, invalidating the descending triangle pattern altogether.
The probability of a bullish move is high per the macroeconomic outlook. As of this Thursday, the US dollar is showing signs of intraday bearish correction. It is down about 0.16 percent against a basket of top foreign currencies, signaling an intraday shift to riskier assets.
Bitcoin typically trades inversely to the dollar. That could allow the cryptocurrency to test the 20-DMA in short-term. An extended move to the upside would bring $35,000 back in view.
Meanwhile, a pullback scenario could have traders open a short position towards the 50-DMA.