Bitcoin price could fall as crypto exchanges record withdrawals of 1 billion USDT: IntoTheBlock

• Bitcoin soon began a downtrend as USDT exchange outflows exceeded $1 billion earlier this year, “suggesting that investors may be adopting a risk-off stance,” IntoTheBlock said.

• The current price action “feels eerily similar” to last year, when Bitcoin’s price traded sideways for two months following a major capitulation in August, one analyst noted.

Cryptocurrency prices have recovered significantly from last week’s turmoil, with Bitcoin {{BTC}} climbing back above $60,000 after falling below $50,000 during the August 5 crash. But further upside may not be on the cards – at least based on one metric that predicted recent local highs.

Crypto analytics company IntoTheBlock noticed that more than $1 billion of Tether’s stablecoin USDT was withdrawn from crypto exchanges on Tuesday, the largest single-day amount since May.

“In recent cases where withdrawals exceeded $1 billion, Bitcoin began a downward trend shortly thereafter, suggesting that investors may be adopting a risk-averse attitude and moving their funds to safer environments such as cold wallets in anticipation of market volatility,” said analysts at IntoTheBlock.

However, there are some nuances in interpreting the data. While stablecoin deposits to exchanges are positive and indicate fresh funds to purchase assets, withdrawals are not always negative, as users may be moving funds to decentralized financial systems (DeFi) to generate returns. In particular, returns for providing USDT liquidity in DeFi pools tend downwards, DefiLlama data shows.

Bitcoin fell to $59,000 during the US trading session on Wednesday, fully recovering yesterday’s increase over 61,000 US dollars despite US CPI inflation report from Wednesday reassuring expectations of an interest rate cut in September.

Zooming out, seasonal trends do not favor higher crypto prices either. For most of Bitcoin’s history, August and September brought negative monthly returns, Data compiled by CoinGlass shows.

The highly regarded crypto analyst Miles Deutscher pointed out that Bitcoin’s current price action is similar to last year’s, when BTC crashed from its high of $30,000 to $24,000 during a major leverage flow in August and traded mostly sideways for two months before rallying in October.

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“Retail interest is waning rapidly, existing market participants are indifferent, there is a lack of clear statements,” he said. “It feels eerily similar to August-October last year.”