Binance stablecoin inflows top $1.6B, signaling traders positioning for rebound

Users of the Binance cryptocurrency exchange deposited $1.65 billion in stablecoins, a massive inflow that often signals traders are gearing up to buy crypto again after the recent market dump.

This happened alongside nearly $1 billion in Ether withdrawals from Binance, according to on-chain data from CryptoQuant. It's the second time this month that net stablecoin deposits on the exchange smashed past $1.5 billion, showing a fresh wave of capital flooding into the spot market, as noted by CryptoQuant’s Amr Taha.

Binance, the biggest crypto exchange by volume, is a key indicator for market moves. On Tuesday, it handled over $29.5 billion in trades, dwarfing runner-up Bybit by nearly six times, per CoinMarketCap data.

Stablecoins are the lifeblood for crypto traders, and when they pile onto exchanges, it usually means people are ready to scoop up digital assets.

The timing is spicy because crypto markets were extending their early-week slump: Bitcoin and Ether gave back gains from Friday, which were fueled by Fed Chair Jerome Powell hinting at rate cuts in September.

The recent chaos started with a wave of long Bitcoin liquidations after a major sell-off over the weekend, when a whale dumped 24,000 BTC on Sunday, triggering heavy selling pressure. Bitcoin briefly dipped below $109,000 on Tuesday, according to TradingView.

Bitcoin's early-week drop was wild because it marked the sharpest deviation in two years from its usual tight correlation with the global M2 money supply—a key measure of money in the economy.

Since the pandemic, Bitcoin has shown a strong link with global M2, usually lagging by two to three months, giving traders a reliable short-term trend guide.

But as Real Vision founder Raoul Pal pointed out, the longer-term correlation is stronger when measured against total global liquidity, not just M2.

Another factor driving Bitcoin's volatility: steady outflows from US spot Bitcoin ETFs. According to CoinShares, Bitcoin ETFs saw over $1 billion in outflows last week.

The silver lining? On Monday, these products finally saw their first day of net inflows in six sessions.