Recent onchain data shows a significant uptick in Tether (USDT) activity, reaching heights not seen in the past six months. Over 143,000 wallets engaged in transactions on March 11, prompting analysts to suggest that traders might be positioning themselves to enter the market amid ongoing price drops.
As Bitcoin dropped to a four-month low of $76,700, the rise in USDT activity underscores a common strategy among traders: to accumulate stablecoins during market dips. Vincent Liu, Chief Investment Officer at Kronos Research, stated, “When USDT and other stablecoin activities increase during price downturns, it indicates a preparatory phase for buying. This added buying pressure could aid in the recovery of crypto prices.” This aligns with the notion that strategic capital deployment during volatile periods can bolster market stability.
Factors contributing to this behavior include macroeconomic uncertainties and specific crypto events, like regulatory changes. Liu noted, “Investors see Tether as a stable haven, making it an ideal holding while they prepare to strategically deploy capital.” The Tether CEO, Paolo Ardoino, mentioned that approximately 37% of USDT holders utilize the stablecoin as a means to store value, acting as a digital savings account primarily for those lacking access to traditional banking.
The broader crypto market recently showcased extreme volatility, reflected in the Crypto Fear & Greed Index, which plummeted to its lowest score in two years on February 26. Following this, a slight recovery was observed, although the index’s current score remains at 45, signifying lingering investor caution.
With inflation rates showing signs of easing to 2.8% in February, the economic backdrop may shift in favor of recovery for cryptocurrencies. Furthermore, the impending Federal Open Market Committee meeting on March 18 could yield insights into future interest rates and monetary policy adjustments, potentially impacting market dynamics.
