Bitcoin price metrics and ‘influx’ of stablecoins to exchanges hint at rally continuation
2024.11.15 12:50
Bitcoin (BTC) is down 0.5% over the last 24 hours to trade at $89,077, 4.5% below its $93,434 all-time high.
Despite this pullback, optimism around a possible crypto-friendly Trump administration, rising stablecoin inflows into exchanges, and steady inflows into the spot Bitcoin exchange-traded funds (ETFs), and several onchain indicators suggest that the bull market is not over.
High stablecoin inflows to fuel Bitcoin rally
Bitcoin’s 17% uptick over the last seven days was accompanied by an influx of stablecoins into cryptocurrency exchanges, according to data from market intelligence firm CryptoQuant.
“Stablecoins entering spot exchanges act as fuel in the market,” said pseudonymous CryptoQuant analyst theKriptolik in an insight note on Nov. 15.
To confirm whether Bitcoin’s bull run will continue, the analyst examined the amount of stablecoins entering spot exchanges and found that “there is a continuation of a higher-than-normal influx of stablecoins.”
“This suggests that, barring any additional news flow, the Bitcoin bull market has not yet ended.”
ERC-20 stablecoin flows into exchanges. Source: CryptoQuant
Historically, price rallies have been preceded by large-scale inflows of stablecoins to exchanges. For example, the 2021 bull run was preceded by an influx of stablecoins that occurred between September 2020 and February 2021.
Most recently, high stablecoin inflows into spot exchanges occurred between January and early March this year resulting in a rally that saw Bitcoin price break previous all-time highs before the Bitcoin halving.
If stablecoins continue flooding exchanges, it would indicate investors’ intention to buy, adding to BTC’s demand-side pressure.
Demand for Bitcoin remains highs
The crypto community believes that Donald Trump’s second term as the president of the United States could usher in a new era for the crypto market.
In a note to investors, QCP Capital expressed confidence that the underlying strength in Bitcoin represents a “systematic shift in the market in anticipation of Trump’s return to office.”
The crypto community is now looking forward to Trump’s fulfilment of his campaign promises and their possible implications, QCP Capital added.
“His idea of launching a strategic BTC reserve and rotation from gold to BTC provides a strong narrative that keeps BTC prices supported.”
Meanwhile, the Coinbase premium index, a metric that tracks the Bitcoin price difference between Coinbase and Binance, has hit its highest level since April, indicating strong US demand.
The chart below reveals as Bitcoin stormed past $90,000 to set a new all-time high at $93,434, US demand surged, pushing the Coinbase premium index to 0.13, levels last seen on April 14.
Bitcoin Coinbase Premium Index. Source: CryptoQuant
Increasing demand is evidenced by massive inflows into US-based spot Bitcoin ETFs, with more than $4.7 billion being poured into these investment products after the US election between Nov. 6 and Nov. 13, as per data from SoSoValue.
BlackRock’s spot Bitcoin ETF (IBIT) accounted for 65.7% of these inflows, seeing more than $3.09 billion in net inflows over the same time period.
Total spot Bitcoin ETF flows. Source: SoSoValue
Despite more than $400.7 million being withdrawn from spot Bitcoin ETFs on Nov. 14, BlackRock’s IBIT still experienced more than $126.5 million in inflows, suggesting demand for this ETF remains high.
Now, traders expect that as Bitcoin price grows, spot BTC ETFs will see more significant inflows in the days to come as the market prepares for a new crypto era under Trump’s administration.
Bitcoin is not “overvalued” at current levels
Despite Bitcoin’s sharp rally over the last seven days, key evaluation metrics indicate that BTC remains reasonably priced, raising optimism among investors of a continued upward move.
The market value realized value (MVRV) ratio is a metric used to indicate whether the price is overvalued or not.
Data from CryptoQuant shows that Bitcoin’s MVRV ratio is currently at 2.5, which indicates BTC is not overvalued. This is below the critical overvaluation threshold of 3.5, which signals that the asset might be nearing a peak.
However, Bitcoin has room for growth at its present level before it reaches overbought territory, suggesting that the current rally could be continued.
Bitcoin MVRV ratio. Source: CryptoQuant
In addition to the MVRV ratio, the onchain realized price bands add another layer of optimism to Bitcoin’s price trajectory.
CryptoQuant’s Trader On-chain Realized Price Bands, which track historical price trends and realized price zones, show that Bitcoin can potentially reach the upper band currently at $104,000 or higher soon.
The realized price bands reflect the maximum historical valuation levels, indicating that Bitcoin could enter a new price discovery phase if it breaks through them.
Bitcoin trader onchain realized price bands. Source: CryptoQuant
The upper realized price band was last reached in March when Bitcoin reached its all-time high of around $73,835. This historical price action could mean that Bitcoin is poised for a similar upward, with the $100,000 level as a realistic target.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
