Glassnode Highlights Sharp Correlation Shift Between Bitcoin Rallies and Tether Outflows

Glassnode’s latest research highlights a strong inverse relationship between Bitcoin’s price and net USDT flows to exchanges, indicating that major price surges often coincide with substantial stablecoin withdrawals. 

From December 2023 onwards, periods of heightened Bitcoin activity have corresponded with USDT outflows, reflecting concentrated profit-taking by investors. Typical outflows during bullish episodes range from US$100 million (AU$154 million) to US$200 million (AU$308 million) daily, with October reaching a peak of over US$220 million (AU$339 million) on a 30-day average. These withdrawals are now easing, as net USDT flows show signs of returning to exchanges.

Historical trends reinforce the link between BTC and USDT, with stablecoin minting increasing during upward movements of Bitcoin and decreasing during market corrections. Bitcoin and USDT remain the largest and third-largest tokens by market cap, valued at roughly US$1.8 trillion (AU$2.77 trillion) and US$184 billion (AU$283 billion) respectively. 

Despite this, Bitcoin is currently trading in a fragile US$81,000  to US$89,000 (AU$124,000 to AU$137,000) band, reflecting low liquidity and weakened demand similar to early 2022 conditions.

Related: XRP and Solana ETFs Surge as Investors Pour In

On-Chain Data Signals Market Fragility

Short-term holder metrics illustrate this fragility, with realised losses increasing sharply. Long-term holders are still profiting, but the pace is slowing, and if liquidity continues to decline, the market may be vulnerable to further downturns. Derivatives markets show orderly deleveraging, neutral funding, and limited leverage, suggesting participants are taking a cautious stance rather than engaging in panic-driven trades.

Additional on-chain data underline these concerns. Large exchange deposits now account for approximately 45% of hourly inflows, indicating that major holders are likely preparing to sell. 

Simultaneously, USDT outflows have weakened spot-buying support, limiting the liquidity required to sustain price rallies. Without a reversal in these trends – including reduced large deposits and renewed USDT inflows – Bitcoin’s recovery above US$90K (AU$138.6K) may struggle to maintain momentum.

Related: Tether Backs Bitcoin-Backed Lending Platform Ledn to Expand BTC-Based Credit

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