Binance Stablecoin Inflows Signal Rising Spot Market Demand Amid Bitcoin Sell-Off

On-chain report shows that stablecoin deposits on cryptocurrency exchange Binance have surpassed $1.65 billion. Such massive user deposits are generally known to precede increased appetite for spot assets, especially after recent market sell-offs. Interestingly, this observed trend comes as Bitcoin crumbles under the weight of whale sheddings and heavy liquidations.

Binance Dominates as Stablecoin Inflows Signal Growing Spot Market Activity

According to insights from CryptoQuant, this deposit trend follows the increased ETH liquidation from Binance, reaching nearly $1 billion. Besides, it marks the second instance in less than four weeks where fiat-pegged deposits on the platform have crossed $1.5 billion. 

As per reports by CryptoQuant’s Amr Taha, this trend reinforces the recent uptick in capital rotation into the spot market. For now, market participants are closely watching Binance for signs of broader market movements.

Binance leads the market with $23.63 billion in daily trading volume and an 11.5 million weekly visits.

Here’s how Binance compares to other top exchanges over the past day:

• Bybit posts $4.18 billion in 24h volume, backed by nearly 3.94 million weekly visits.
• Coinbase records $3.46 billion in daily volume with 39,000 weekly user visits.
• OKX currently handles $3.26 billion daily and draws 5.44 million weekly visitors.
• Upbit posted $2.72 billion in intraday trading volume, alongside 1.87 million weekly visits.

Data shows that fiat-pegged crypto coins are mainly used by traders to fund their crypto purchases. When large amounts of stablecoins move onto exchanges, it usually means traders are preparing to buy other cryptocurrencies.

Crypto Markets Reel as Bitcoin Flash Crash Triggers Capital Rotation

The flurry of stablecoin movements coincides with the ongoing market downtrend. OG crypto, Bitcoin, traded relatively flat on Tuesday after falling below the $111,000 mark over the weekend.

Ether also relinquished some of its gains after hitting an all-time high of $4,953 on Sunday, driven by Federal Reserve Chair Jerome Powell’s dovish comments regarding interest rate cuts in September.

The recent market unrest was fueled by a recent large-scale whale liquidation, which triggered a Bitcoin flash crash and heavy capital rotation.

Bitcoin Breaks from Global M2 Correlation Amid Capital Shifts and ETF Inflows

Bitcoin’s recent slip is significant, as it marks one of the most notable trend deviations in the past two years. Data shows that BTC deviated from its usual close movement with the global M2 money supply, which measures capital movements within the economy.

In the past five years, the OG crypto has shown strong alignment with the global M2, except for some occasional lags. Traders often look to this correlation as a reliable short-term guide for price trends.

However, Real Vision founder Raoul Pal explained that the longer-term alignment is stronger when compared to total global capital flow, rather than just M2.

Bitcoin’s recent price fluctuation is also due to the streak of capital rotation outside US spot exchange-traded funds (ETFs). In fact, these financial vehicles only recently reversed their six days of outflows with a $219 million worth of investments on Monday.