Binance Stablecoin Outflows Soar: Why This Affects Bitcoin
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- The recent negative sentiment was characterized by ongoing withdrawals from Binance stablecoins.
- USDT dominance has also risen as investors prioritized preserving their capital during the market downturn.
This week’s risk-averse sentiment has unsettled many crypto investors, prompting most to realize profits or exit completely to safeguard their capital.
Pseudonymous CryptoQuant analyst Dark Fost noted that the shift in Binance stablecoin flow—from over $13 billion in inflows in November to outflows of $310 million by early January—mirrored last summer’s BTC market crash.
“We are currently observing a reversal in stablecoin flow dynamics on Binance. This type of trend reversal was similarly observed in May 2024, just prior to Bitcoin’s significant price drop during the summer.”
Source: CryptoQuant.
The Bitcoin market is experiencing tension.
Fost remarked that tepid inflows of stablecoins typically indicate weak purchasing demand. He cautioned that persistent outflows since mid-December highlight caution within the market and could detrimentally affect Bitcoin’s future prospects [BTC]. .....
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“While a decrease in stablecoin inflows suggests weakening purchasing power, actual outflows signal a more significant shift towards caution among investors.
The lackluster market sentiment can be attributed to sluggish inflation rates in the US, which have reinforced expectations for Fed rate cuts—a move that may hinder risky assets’ performance. Optimism around markets has also been tempered by sharply worded minutes from FOMC meetings and reports indicating government approval for selling seized BTC from Silk Road.
Dark Fost’s concerns were further validated as Tether (USDT) dominance increased; this metric tends to correlate inversely with BTC prices, with recent surges corresponding with local highs at $102,000 and $108,000.
Analysts like Peter Brandt have previously cautioned that if BTC falls below $90,000, it could be driven down to $75,000 based on its inverted head-and-shoulders pattern.
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It remains uncertain whether USDT dominance will reach 4% again—an essential threshold for any potential recovery of BTC value. Both Benjamin Cowen and AskFX senior analyst James Vanstraten have played down worries regarding the recent drop in BTC price as typical behavior associated with January following an annual halving.
P.S.: At press time , this asset was making attempts at stabilizing above $94 , 000 .
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