The recent sharp decline in the cryptocurrency market led to an influx of $2.72 billion worth of Tether (USDT) into centralized exchanges, which is the third-largest inflow of USDT into Ethereum to date.
The increase in Tether inflows coincided with Bitcoin (BTC) dropping to nearly $91,000 due to concerns about trade wars affecting global markets.
Analysts believe that this unusually high movement of capital was driven by traders depositing additional collateral to cover margin calls and avoid liquidation. It also attracted opportunistic investors who took advantage of the price dip to accumulate BTC.
“The significant market decline triggered significant capital flows. In particular, the net flow of USDT to exchanges reached its third-highest level ever, surpassing $2.72 billion.
Since the sell-off, Bitcoin has recovered and is stabilizing within the $95,000 to $100,000 range. Stablecoins such as Tether and its regulated counterpart USDC continue to play a crucial role in cryptocurrency trading by providing liquidity and facilitating fast asset purchases.
The recent influx of USDT highlights the vital role that stablecoins play during times of market volatility, as they act as a bridge for traders to quickly respond to price movements.
Whether the surge in Tether deposits indicates ongoing buying pressure or cautious repositioning in the market remains to be seen as the market digests macroeconomic developments.
* This article does not provide investment advice.