Crypto Whales Accumulating Stablecoins; Is This A “Buy The Dip” Opportunity?

By Ambar Warrick
April 7, 2022 Updated April 7, 2022
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ETH Whales seen buying into utility tokens

Crypto whales appeared to be positioning to buy into a cheaper market, data showed. A recent drop in crypto prices saw a corresponding rise in stablecoin buying by whales.

Stablecoins such as Tether (USDT), USD Coin (USDC) and DAI are commonly used to facilitate crypto buying. A trader exchanges fiat for stablecoins on an exchange, which they then use to purchase other tokens.

As such, stablecoins are a good indicator of forward positioning in the market. A rise in buying by crypto whales usually precedes a recovery in the market.

USDT remained the most sought-after stablecoin, consistently seeing volumes of nearly $90 billion in the past two days.

Crypto whales accumulate stablecoins

Data from blockchain researcher Santiment showed stablecoin whale transactions had increased mildly in response to recent market weakness. It appeared likely that whales were positioning for another buying opportunity.

Historical data shows that a rise in stablecoin demand usually preceds a large jump in crypto prices.

Crypto whales accumulating stablecoins
Source: Santiment

Crypto markets shed about $150 billion over the past week, as a stellar end-March rally appeared to have lost steam. But most major tokens are still far above 2022 lows, with several altcoins also trading near record highs.

The latest tumble appears to be driven by concerns over rising inflation and sharp interest rate hikes by the U.S. Federal Reserve. Most risk-driven markets, including stocks, gave up recent gains.

Higher inflation is also expected to put more downside pressure on the crypto market.

Stablecoin demand could also indicate bearish sentiment

But given their status as a safe haven, increased stablecoin demand in crypto whales could also signal a further decline in the market. The tokens operate on a 1:1 peg against the U.S. dollar, and as such, are sought during times of market volatility.

The Russia-Ukraine conflict was a major driver of stablecoin demand this year. The market was essentially in free-fall through late-February, with most crypto whales sticking to the sidelines during increased volatility.

But increased whale activity was pivotal in driving the market higher through March.

With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn't trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns. You can reach him at [email protected]
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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