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Crypto whales appeared to be positioning to buy into a cheaper market, data showed. A recent drop in crypto prices saw a corresponding rise in stablecoin buying by whales.
Stablecoins such as Tether (USDT), USD Coin (USDC) and DAI are commonly used to facilitate crypto buying. A trader exchanges fiat for stablecoins on an exchange, which they then use to purchase other tokens.
As such, stablecoins are a good indicator of forward positioning in the market. A rise in buying by crypto whales usually precedes a recovery in the market.
USDT remained the most sought-after stablecoin, consistently seeing volumes of nearly $90 billion in the past two days.
Crypto whales accumulate stablecoins
Data from blockchain researcher Santiment showed stablecoin whale transactions had increased mildly in response to recent market weakness. It appeared likely that whales were positioning for another buying opportunity.
Historical data shows that a rise in stablecoin demand usually preceds a large jump in crypto prices.
Crypto markets shed about $150 billion over the past week, as a stellar end-March rally appeared to have lost steam. But most major tokens are still far above 2022 lows, with several altcoins also trading near record highs.
The latest tumble appears to be driven by concerns over rising inflation and sharp interest rate hikes by the U.S. Federal Reserve. Most risk-driven markets, including stocks, gave up recent gains.
Higher inflation is also expected to put more downside pressure on the crypto market.
Stablecoin demand could also indicate bearish sentiment
But given their status as a safe haven, increased stablecoin demand in crypto whales could also signal a further decline in the market. The tokens operate on a 1:1 peg against the U.S. dollar, and as such, are sought during times of market volatility.
The Russia-Ukraine conflict was a major driver of stablecoin demand this year. The market was essentially in free-fall through late-February, with most crypto whales sticking to the sidelines during increased volatility.
But increased whale activity was pivotal in driving the market higher through March.