Recent data from Santiment showed a strong correlation between stablecoin whale transactions and Bitcoin prices.
Low whale trades and USDT inflows indicate the unlikeliness of an immediate price hike.

The correlation between stablecoins, Bitcoin [BTC]and the broader cryptocurrency market is clear, suggesting a cause-and-effect relationship.

But the question is, can we use this information to predict future price movements?

Stablecoins and Bitcoin price movement correlation

Sanitation analysis unveiled a pivotal statistic that highlighted the critical role of major stablecoins in shaping the broader cryptocurrency market.

In particular, the analysis of whale transactions – those valued at $100,000 or more – points to a significant correlation between spikes in stablecoin transactions and corresponding increases in BTC prices.

The correlation focused on the top five stablecoins by market capitalization: USDT, USDC, BUSD, DAI, TUSD, and USDP.

The observed data clearly illustrates a strong relationship between significant Bitcoin price increases and spikes in stablecoin whale transactions. For example, on March 11 Tether [USDT] experienced its most substantial rise and Bitcoin’s price soon followed.

Source: Sentiment

Similarly, on February 13, a surge in Binance USD (BUSD) trades led to a brief price recovery. Going back even further, the intense stablecoin activity on November 10 (during the FTX crash) marked a local price floor for Bitcoin in the previous year.

These examples highlight the critical role stablecoins play in predicting and influencing the movements of the cryptocurrency market.

Current stablecoins move

As of now, there is no major spike in the whale trade chart, but there is a slight increase in USDT whale trades. Typically, whale transactions with stablecoin indicate the movement of significant amounts of money to exchanges for purchase purposes.

However, the current uptick in USDT whale trades should not be a cause for concern as it was not enough to trigger a potential local spike for the crypto market.

A look at USDT

A closer look at investor behavior and price movements of the largest stablecoin by market cap, USDT, yielded interesting insights. Analysis of CryptoQuant’s NetFlow chart indicated that there was no significant activity from the stablecoin.

At the time of writing, the NetFlow chart showed USDT outflows dominating. However, the outflow volume was relatively small and was around 25 million.

Source: CryptoQuant

Bitcoin has successfully crossed the $30,000 mark and the rest of the cryptocurrency market looks set to follow suit with a rally.

However, the current state of stablecoin whale transactions and inflows suggests that a significant price spike is not imminent. It is likely that a rally will only occur if inflows and whale trades increase, indicating that investors are willing to buy more BTC.

This post Stablecoin Whale Transactions and Bitcoin Prices: The Correlation Revealed

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