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USDT On Ethereum Sees Largest Exchange Outflow Since February — Details

According to the latest on-chain data, the Ethereum-native iteration of USDT, the world’s largest stablecoin, has just witnessed its largest exchange outflow in recent months.

1.29 Billion USDT Flow Out Of Crypto Exchanges

In a May 9th post on the X platform, blockchain analytics firm Santiment revealed that USDT on the Ethereum network recently recorded its largest flow out of exchanges in months. Around 1.29 billion stablecoins (the highest since February) were transferred out of exchanges on Friday, May 8th.

This on-chain observation is based on the change in the Exchange Flow Balance indicator, which measures the net amount of tokens moving into and out of centralized exchange addresses.

A spike in the Exchange Flow Balance metric indicates that more tokens (USDT, in this case) are flowing to centralized exchanges. On the other hand, when the indicator declines, it suggests that investors are withdrawing assets from these trading platforms.

Santiment explained the significance of investors moving their USDT away from exchanges, noting that this would ordinarily mean they are withdrawing their buying power from trading platforms where they can use it for instant cryptocurrency purchases. On the surface, this reduction of buying power (or capital) on exchanges is a bearish signal for crypto markets.

However, the analytics firm believes that the significant USDT outflows (of this reported magnitude) suggest that institutional investors are moving capital to self-custody wallets, DeFi protocols, or OTC (over-the-counter) desks ahead of larger planned transactions. Therefore, capital is believed to be flowing out of the ecosystem, not entirely, but being repositioned for even larger purposes.

Santiment also highlighted the pattern often surrounding exchange outflow spikes of this magnitude. For instance, as observed in the chart below, the Bitcoin price witnessed a mini-pullback over the subsequent two weeks following the 3.72 billion USDT outflow on February 9.

USDT

What’s more interesting is that this pullback birthed the buying opportunity that has seen the Bitcoin price jump by more than 30% in the past few months.

Santiment concluded in the social media post:

Whether this current capital re-enters exchanges as buying pressure in the near term is the key variable to monitor. If USDT begins flowing back onto exchanges in the coming days, it would signal that deployment into crypto assets is imminent.

Crypto Market Capitalization

As of this writing, the total cryptocurrency market capitalization stands at around $2.66 trillion, up nearly 4% over the past week.

USDT


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