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Bitcoin Activity Shows Signs of Boost in On-Chain Data

Over-the-counter (OTC) Bitcoin (BTC) deals might happen in a way similar to the pattern seen last February 2019, according to CryptoQuant CEO Ki Young-Ju. As explained by the on-chain analyst, this is historically a bullish hint. However, Ki Young-Ju warned that the pattern is not absolute and must not depend on isolation.

In addition to that, Ki said that the number of Bitcoin transfers reached a new yearly high. Also, the said transactions did not come from exchanges. According to two on-chain metrics, he noted that it might be a resurgence of OTC volume.

He stated, “The number of BTC transferred hits the year-high, and those TXs are not from exchanges. Fund Flow Ratio of all exchanges hits the year-low.”

Ki believes that something is happening – it might be OTC deals. And he mentioned that this also happened in February 2019 when OTC volume skyrocketed, making it a strong bullish signal.

Most of the time, high net-worth individual buyers and miners purchase or sell Bitcoin in the OTC market. With that, it lets BTC exchange hands without putting any significant pressure on the exchange market.

 

The Catch

The CTO of Glassnode, Rafael Schultze-Kraft, noted that the surge in volume is not Bitcoin changing hands. Contrarily, the analyst explained that the volume is flat and represents ‘change BTC.’

Schultze-Kraft said, “Bitcoin on-chain volume is not increasing or hitting any highs. Even by applying the most basic change-adjustments uncovers that the increase in volume is just ‘obvious change’ moving back to the sender.”

Instead of OTC deals, it could serve as internal transfers or other kinds of internal wallet movements. Nevertheless, it does not necessarily mean a bullish trend for Bitcoin in the near term.

 

Stablecoins in 2020

Elsewhere, the supply of Coinbase-backed stablecoin USD Coin (USDC) has boosted to as high as 250% since the beginning of 2020. And this includes an 80% expansion in the last two months.

As it began the year with almost $520 million market cap, USDC now ranks as the 16th-largest crypto asset with a $1.86 million capitalization, beating all other major stablecoins except for the $14.5 billion Tether (USDT) by about four times.

Aside from that, other stablecoins – most pegged to the value if $1 U.S. – have seen significant growth for this year. And this is with DAI and Binance USD expanding by 970% and 800% respectively in 2020.

But still, the race is on for established stable tokens to consolidate market share before major financial institutions and corporations go in the fray with their tokenized money.

Then, Fnality, a stablecoin project spanning 13 global banks spearheaded by UBS Group, predicted that it would get regulatory approval for the ‘UtilitySettlement Coin’ initiative by the second quarter 2021.

The Fnality project has been in development for over five years. After that, it plans to establish a network featuring tokenized U.S. dollars, Euros, Japanese yen, British pound sterling, and Canadian dollars.

Also, existing stablecoins might experience stiff competition from Facebook’s Libra competition. And this is because, despite its early regulatory push-back, it looks like it is slowly gaining favor among lawmakers.

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