A representative from the crypto-data company, Santiment, explained how Tether chain data can potentially predict Bitcoin’s (BTC) bullish runs.
Santiment’s director of marketing and social media, Brian Quinlivan, told Cointelegraph on May 7 that the percentage of USDT in exchanges often anticipates Bitcoin’s upward runs. He explained the principles behind the analysis:
„Most USDT are not just taken out of exchanges to be stored in wallets or cashed through a FIAT-based platform like Coinbase. When people aren’t using USDT, they are most often putting it into Bitcoin. And the best part is that this percentage of USDT often fluctuates a few hours or days before the
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price reacts to it. So monitoring this metric in advance can end up producing a tremendous advantage by catching a sudden fluctuation well in advance.
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The correlation is expected to last. Quinlivan noted that this correlation began a couple of years after the launch of USDT, once stablecoin gained traction. Now, he explained that Tether is clearly used as the most stable price token. He also said that he is confident that this correlation will continue to manifest itself in the future. Quinlivan noted that the one-year chart has shown a clear and distinct inverse correlation over the past 9-10 months.
Chart of Bitcoin price with Tether’s USDT on cryptomone exchanges Source: Santiment
Other interesting correlations
Quinlivan also pointed to a relationship between the amount of decentralised stablecoin, DAI, in the cryptomone exchanges and the price of Ether (ETH). He explained:
„The amount of supply of IAD on the exchanges often seems to lead the way in the price of Ethereum. However, this is a little less consistent than the BTC-USDT pair, as the price of ETH depends more on what BTC is doing at any given time“.
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Finally, the data company representative acknowledged that other metrics are also worth examining. He specifically mentioned an interest in social trends, such as keywords and topic mentions in various social platform conversations. He said that, in recent months, the company noted that the fear associated with COVID-19 has had a direct inverse correlation with BTC pricing.