On-chain data from Santiment suggests that the stablecoin whale supply could be the metric to watch for the likelihood of a Bitcoin bounce.
Whale Supply Of Stablecoins Could Hold Key To Bitcoin Rebound
In a recent post on X, the on-chain analytics firm Santiment discussed the percentage of the total stablecoin supply that the whales in the sector are holding right now.
The “whales” here refer to entities that are carrying at least $5 million worth of stablecoins in their addresses. Naturally, all stablecoins that are in circulation are included in this metric, regardless of their market caps.
“A tried and true method for predicting where crypto heads next is analyzing big wallets to see the ratio of stablecoins they hold,” explains the analytics firm.
Here is a chart that displays the data for the holdings of these humongous investors:
The value of the metric seems to have been moving sideways in recent days | Source: Santiment on X
The reason that the stablecoin supply of this cohort may be relevant for the rest of the cryptocurrency sector is that it provides a look into the buying power available to these whales.
Generally, these holders use stables to store their capital away from the volatility of coins like Bitcoin, but once they feel that the time is right to jump back in, they deploy these fiat-tied tokens back into the other coins, providing a bullish boost to their prices.
This can be seen working in action in the chart as well. Back in May-June, these investors had been accumulating, and once their supply had hit a peak and they had started distributing instead, the Bitcoin price had observed a rally.
Given the close timing, it would seem likely that the whales had been shedding their stablecoin holdings in order to buy assets like BTC, thus acting as fuel for the uplift.
As displayed in the graph, the stablecoin holdings of the whales haven’t changed much recently, suggesting that these investors haven’t been taking part in either accumulation or distribution.
This could indicate that the whales don’t have any extraordinary buying capacity currently. An uplift in this indicator, however, would imply that the purchasing power of this cohort is going up, which could then lead towards a rebound for the rest of the market.
One positive sign forming in the market may be the fact that the market cap of the six largest stablecoins is slowly starting to turn around.
Looks like the indicator's value has been heading up recently | Source: Santiment on X
The combined market cap of these large stablecoins has been in a perpetual downtrend since early 2022, suggesting a constant drainage of capital from the sector. In the past couple of weeks, though, these fiat-tied assets have seen a combined growth of $663.2 million, which may be one of the early signs that a rebound could finally be taking place.
Such small rises in the metric have already been seen a few times during this downtrend, though, so this latest one might as well turn out to be a temporary deviation like those previous ones. If, however, this recent increase is indeed a sign that things are finally changing, then it would mean that the cryptocurrency sector is seeing some constructive growth at last.
Bitcoin hasn’t moved an inch in the last few days as the asset continues to move around the $25,900 level.
BTC has fallen back to consolidation recently | Source: BTCUSD on TradingView