Sharks and whales hoard stablecoins, why it could be bullish for bitcoin

The data shows that sharks and whales of the largest stablecoins are hoarding, something that could be bullish for bitcoin.

Sharks and whales have been loading up on stablecoins lately

According to data from on-chain analytics firm EmotionSharks and whales have recently improved their share of the total supply of stablecoins such as USD Coin (USDC), Dai (DAI) and Binance USD (BUSD).

The relevant indicator here is “supply distribution”, which tells us what percentage of the total circulating supply of a cryptocurrency is being held by which wallet group in the market.

Addresses are divided into these “wallet groups” based on the total number of tokens they currently hold. In the context of the present discussion, the range of 100,000 to 10 million coins is of interest.

This group naturally includes the wallets of all investors who hold a minimum balance of 100,000 and a maximum of 10 million tokens. As the assets in question here are USD-pegged stablecoins (meaning their value is fixed at $1), the range limits convert to $100,000 and $10 million, respectively.

Since these amounts are huge, only the biggest investors in the market will be sitting at these addresses. Sharks and whales are two groups large enough for these wallets to cover.

These conglomerates can be quite influential in the market, as they have the power to move a remarkable amount of coins at once. Obviously, whales would be the more important group of the two, as they are the larger cohort.

Now, here is a chart showing the trend in the supply distribution of these sharks and whales for the three most popular stablecoins in the region:

All three of these supplies seem to have gone up in recent weeks | Source: Santiment on Twitter

As shown in the graph above, the supply of these three stablecoins decreased in March, but has seen an increase since then. This means that sharks and whales of the respective coins are accumulating during this period.

Generally, investors use stablecoins whenever they want to avoid the volatility associated with other assets such as bitcoin. Therefore, sharks and whales taking these coins could be a sign that they have been running out of other assets recently.

Eventually, however, investors who have taken a safe haven in stablecoins can exchange these tokens back for volatile coins once they feel the price jump is right.

Whenever these holders swap out their stables, the prices of the assets they are trading in may naturally see buying pressure. This implies that the currently piled-up stablecoin supply of sharks and whales could be viewed as potential dry powder that could be deployed into assets such as bitcoin.

Over the past few weeks, the USDC, DAI and BUSD supply of these huge holders has flattened, which means they may have slowed down their exits from the volatile coins. If the trend reverses now and they start scooping up other cryptocurrencies with their stable, BTC could potentially feel a bullish effect.

btc price

At the time of writing, bitcoin is trading around $26,700, down 1% over the past week.

BTC has erased the gains from yesterday | Source: BTCUSD on TradingView

Featured Image from NOAA on Unsplash.com, Charts from TradingView.com, Sentiment.net