USDT Supply Ratio On Crypto Exchanges Spikes Exponentially, Here’s What It Means?

The USDT supply ratio on crypto exchanges witnessed a massive surge in three months. The space observed this development amidst two significant stages of the crypto markets from May to late-July. Such stages as the period of the coldest touch of the Crypto Winter, and the slight recovery of the markets. In light of this, the increase in the ratio of USDT supply on exchanges sends two important indications.

USDT supply ratio on exchanges is currently 42%

As seen on a Santiment chart, the ratio of USDT’s total supply on exchanges more than doubled from May. The community witnessed a ratio of 19.7% on May 9, but this has surged to the current 42%. The chart also shows a spike especially recorded sometime in June when the markets crashed. This could indicate a move from investors to buy the dip, or capitulation.

The surge could indicate an interest in institutional and retail investors to enter the markets, with a recovery in sight. This translates to a high in buying power that was last seen in early 2020.

With the markets showing signs of a comeback, most investors would want to profit from the imminent rally. As a consequence, they would look to increase their stablecoin holdings as they prepare to enter trades. USDT is the go-to stablecoin, so the ratio of its supply on exchanges increases significantly.

Profit-taking trades could have contributed to the surge

On the other hand, this increase could signal a wave of profit-taking trades carried out by market traders. The devastating effects of the Crypto Winter on the markets were more prevalent in the month of June. This saw Bitcoin (BTC), Ethereum (ETH) and all other assets plummet to scary levels. ETH in particular dipped to three figures, and BTC fell below $18k.

At this stage, a high number of investors entered into trades to buy the dip while others hoped for a recovery. The month of July brought the much awaited comeback albeit on a mild scale. The slight recovery spilled to August despite witnessing impediments on occasion.

This recovery could have prompted investors to take in profits which contributed to the increase in USDT ratio on exchanges. The markets have once again encountered a blockade on their rally. Most assets are down, and the last 24 hours have not looked favourable.

On the top 20 list, BNB, AVAX, and ETC are the only assets with slight gains in the past 24 hours. BTC and ETH respectively trade at $23,055 and $1,695 at the time of writing. BTC has dipped by 1.94% and ETH has shed 2.62% of its value in the last 24 hours.