Stablecoin Activity Signals Market Reversal Despite Sinking Crypto Trading Volumes
- Increased USDT transfers and wallet creations signal the accumulation of capital ready to buy the dip on several cryptos.
- Trading volume has dropped from the Feb. 27 peak, indicating that market participants are still cautious.
- One analyst expects macroeconomic events to push the price higher, while another says it depends on the Fed meeting.
- Lower MDIA and a growing number of USDT holders hint at increased buying power that could drive a price surge.
Contrary to what has been happening for the last few weeks, interaction with stablecoins — particularly Tether (USDT) has been rising lately. This development comes even as the overall crypto trading volume continues to decline.
Historically, an increase in stablecoin activity indicates that sidelined capital may be preparing to re-enter the market. While lower trading volumes suggest caution, the growing stablecoin flow could signal a rise in crypto prices in the near term.
USDT Transfers Hit Six-Month High
On March 12, on-chain analytics platform Santiment reported a surge in Tether’s (USDT) on-chain activity. Over 143,000 wallets transferred USDT, marking a six-month high.
When stablecoin transfers rise during a major price correction, it signals that traders are gearing up to buy the dip. Interestingly, this surge in activity is similar to the trend seen in September 2024.
Around that time, specifically on Sept. 14, nearly 54,000 USDT wallets were created as Bitcoin (BTC) traded just above $60,000. By November, BTC had soared past $90,000.
Altcoins followed suit—XRP broke $1 for the first time in six years, Dogecoin (DOGE) surged to $0.35, and Cardano (ADA) neared $0.80, confirming that accumulation fueled major price rallies.
However, unlike then, the current market lacks a significant surge in trading volume, which previously strengthened buying pressure.
Trading Volume Drop Contradicts Accumulation
Earlier today, Santiment revealed that market-wide trading volume has been dropping, which contradicts the surge on Feb. 27.
“Crypto-wide trading volume has been dropping since its peak back on Feb. 27 (when traders were optimistically buying dipping prices). After further market cap declines these past two weeks, trader behavior indicates a mix of exhaustion, hopelessness, and capitulation,” It mentioned
Despite the decline in volume, Tether has continued to mint more stablecoins. For instance, CCN recently reported that the stablecoin issuer minted 1 billion USDT on Sunday, March 2, further adding fresh liquidity to the market.
Days after that, Bitcoin soared above $94,000 from under $80,000 on the last day of February.
Some altcoin prices also followed in the same direction. However, in less than two days, the assets retraced all these gains as buying pressure failed to hold.
This sharp price drop may be tied to falling trading volume. When prices rise while volume shrinks, it signals weak momentum, making it harder to sustain the uptrend.
Vitaliy Shtyrkin, Chief Product Officer of B2BINPAY, noted that a price rally could be coming. However, it could depend on the macroeconomic outlook.
“There was a similar situation in September 2024, when over 53,000 new USDT wallets were created within a single day. In support of the first trend, it makes sense to also mention the recently introduced official bill about the creation of a national Bitcoin reserve by Cynthia Lummis. The same is true about the situation with Ripple and its acquisition of DFSA approval, in addition to the list of over 60 regulatory approvals worldwide. It can foster the surge in prices of cryptocurrencies and altcoins,” Shtyrkin told CCN.
In addition, the B2BINPAY CPO mentioned that if there are no positive developments around regulation, traders might become hesitant and fail to buy the dip.
Traders Awaiting Ideal Entry Prices
Meanwhile, as initially stated, it appears that traders are waiting for the proper entries before they begin actively buying the dip. Two other metrics besides the surge in stablecoin activity are the number of USDT holders and the Mean Dollar Invested Age (MDIA).
At the beginning of the year, the number of USDT holders was 6.53 million. Today, that figure has increased to 7.06 million, indicating market participants have armed themselves with more buying power.
Data shows that the 90-day MDIA has been falling recently. The MDIA is the average age of every dollar contributed to a coin’s market cap, weighted by the purchase price.
When the metric rises, it suggests that most coins remain stagnant, making prices more vulnerable to downturns and any rebound less sustainable. However, in USDT’s case, the MDIA has plummeted, reinforcing the rising stablecoin activity thesis.
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USDT Holders and 90-Day MDIA | Credit: Santiment
This indicates that holders are gradually deploying their stablecoins into the market. If this trend continues, it could drive a surge in trading volume and strengthen buying pressure.
In addition, if history like the September to November 2024 performance repeats and trading volume increases, current low prices might climb significantly within the next two months or less.
However, if this changes, crypto prices might remain stuck in consolidation even if stablecoin transfers surge.
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