According to analytics firm Santiment, the patterns of the two most valuable stablecoins in the market can indicate when the crypto markets are preparing for a price increase.
Monitoring the supply of Tether (USDT) and US Dollar Coin (USDC) on exchanges can give traders a hint when there is a potential price surge in the crypto market.
“Especially when USDT and USDC supplies are being moved rapidly to exchanges, as we saw with USDC in March right before the market-wide price surges.”
According to the analytics firm, traders should keep an eye on the stablecoin activity of the top 10 largest USDT and USDC addresses.
Santiment also recommends monitoring the mean dollar invested age of Tether and USDC, which is the average age of all tokens on the blockchain weighted by the purchase price.
“Mean dollar invested age is what we would call a ‘validator’ metric. When the curve of this line begins moving down, it’s indicating that any upswing in crypto markets is being validated by dormant coins moving to push up prices even further in the future.
And in the case of stablecoins, movement of older coins that had been stagnantly sitting in wallets is generally a very good sign.”
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Circle CEO Jeremy Allaire said that Yuan-backed stablecoins may offer a more immediate path for China’s currency globalization efforts rather than the eCNY central bank digital currency (CBDC).
“If eventually the Chinese government wants to see the RMB used more freely in trade and commerce around the world, it may be that stablecoins are the path to do that more than the central bank digital currency,” Allaire said in a recent interview with the South China Morning Post.
According to Allaire, having a stablecoin linked to the offshore Yuan (CNH) could boost the usage of the currency in global trade and commerce.
However, the group responsible for creating private CNH and Hong Kong dollar stablecoins was apprehended in May, as reported by SCMP.
