Will bitcoin rebound? This metric may be worth a look

On-chain analytics firm Sentiment suggests this indicator may be worth watching for an indication of when bitcoin might rally.

Large stablecoin holders have recently seen stable supply

According to EmotionThe dolphins and sharks movements of top stablecoins such as Tether (USDT) and USD Coin (USDC) could be relevant to the price of bitcoin.

Generally, investors use these fiat-pegged tokens whenever they want to avoid the volatility associated with other assets in the market like BTC. However, such investors are likely to buy back into volatile cryptocurrencies, as holders who are actually exiting this space do so via fiat.

When these investors feel the prices are right to jump back into other coins, they simply exchange their stablecoins for them. Naturally, this change can act as a buying pressure for the market in which they are moving, and thus, provide a rapid increase in the asset’s price.

To examine whether there is any significant conversion of stablecoins to bitcoin and others right now, Sentiment looked at data to supply relatively large stablecoin investor groups.

More specifically, the joint holding of dolphins and sharks is of interest here. These holders typically keep between 10,000 and 100,000 BTC on their balance.

Now, here is a chart that shows how the supply of USDT and USDC for these investor groups has changed over the past few months:

Looks like the two metrics haven't shown much movement in recent days | Source: Santiment on Twitter

As shown in the above graph, Dolphin and Shark, the two largest stablecoins in the sector, have seen their combined supply move mostly sideways during the past few weeks.

This means that these decent-sized investors haven’t been participating in any sort of net conversion lately, whether it be swapping bitcoin into stablecoins, or exchanging their stablecoins for other assets.

Interestingly, this sideways trend has continued despite the cryptocurrency falling to a low of $29,000 over the past few days.

The analytics firm explains, “Currently, one of our key considerations is whether this behavioral pattern will continue in the coming 24 hours, especially in light of today’s declining prices.” “Will these users see this change as an opportunity to ‘buy the dips’? Or will they choose to ‘abandon ship’ amid growing market uncertainty?”

Naturally, if the supply of these large stablecoin holders starts to decrease in the near future, it could be a sign that these investors are buying bitcoin while its price is at a discount.

However, on the other hand, a rise instead would clearly be a worrying sign, as it could mean that dolphins and sharks are starting to abandon BTC and exit it for now.

bitcoin price

At the time of writing, bitcoin is trading around $29,200, down 3% over the past week.

The value of the asset seems to have been moving sideways since the plummet | Source: BTCUSD on TradingView

Featured Image from iStock.com, Chart from Tradingview.com, Sentiment.net