Bitcoin Targets $27K; Here Are Key Factors Driving the Rally

The market is witnessing a massive flow of funds from stablecoins into Bitcoin.

Bitcoin (BTC) recaptured the $26,900 price point today for the first time since June 2022. Despite facing rejection at the lofty position, the asset’s rally persists, driven by a mirage of bullish factors, including a massive inflow of funds squeezed out of stablecoins by investors.

Investors Abandon Stablecoins

Crypto-focused data analyst James Straten called attention to this growing pattern today, citing data from Glassnode. A Glassnode chart reveals that $7 billion has been drained from stablecoins and sent to BTC in the past 30 days, with up to $16 billion drained in the past 4 months.

The story of 2023 is stablecoins being drained for #Bitcoin.

$7B of stablecoin outflows in the past 30 days ($16B in the past 4 months). pic.twitter.com/Cq4q0fbcvL

— James V. Straten (@jimmyvs24) March 17, 2023

This pattern has been triggered by the growing issues surrounding the recent fiascos in the banking sector, including the Silvergate and Silicon Valley Bank implosions. Investors have questioned the stability of fiat-backed stablecoins, which hold their reserves in banks and other regulated financial institutions.

Recall that USDC recently depegged from the dollar shortly after Circle disclosed that $3.3 billion out of its $40 billion is stuck in the recently-collapsed Silicon Valley Bank. The development further compounded investors’ angst, causing them to move their funds from stablecoins to BTC.

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Moreover, amid these concerns, Binance CEO Changpeng “CZ” Zhao revealed Monday that Binance will convert the remaining $1 billion of the Industry Recovery Fund from stablecoins to BTC, BNB, and ETH, citing “changes in stablecoins and banks.”

Furthermore, Lookonchain, a blockchain surveillance system, disclosed today that Tether has minted $3 billion worth of USDT on the Tron and Ethereum networks in the past 2 days. Tether was also observed to have sent $135.3 million worth of USDT to an address affiliated with Bastion Trading, which then sent the funds to Binance.

Tether minted 3B $USDT on #Tron and #Ethereum in the past 2 days.

We noticed that theskybomber.eth (related to @BastionTrading) received 135.3M $USDT from Tether Treasury in the past 2 days, then transferred all $USDT to #Binance.https://t.co/K8yhddu9yw pic.twitter.com/lAiAeq4wPz

— Lookonchain (@lookonchain) March 17, 2023

BTC Holders Remain Resolute

Besides the transition of funds from stablecoins to Bitcoin, another factor supporting the latest rally is the conviction of long-term holders. IntoTheBlock highlighted today that the total amount of BTC owned by addresses holding their assets for at least a year has reached an all-time high.

Bitcoin holders continue to hodl. The $BTC owned by addresses holding for over one year reaches a new all-time high. With over two-thirds of all circulating supply in their bags, history suggests this group is unlikely to start selling their holdings until we reach close to the… https://t.co/rvSqr3Yb6C pic.twitter.com/LtjgZQpuCV

— IntoTheBlock (@intotheblock) March 17, 2023

In addition, an unidentified whale address accumulated 40,141 BTC worth an estimated of $1 billion in a single transaction yesterday, marking the most significant BTC transfer this year. The funds were observed to have been sent from Binance.

🐳 A $1B #Bitcoin transaction has been sent to 3M219KR5vEneNb47ewrPfWyb5jQ2DjxRP6. This is the largest $BTC on-chain transaction of the year. The address held a high of 143,310 $BTC in October, was emptied out in November, and is now back to 40,141 $BTC. https://t.co/l9K3Qu8J2M pic.twitter.com/1yVJpKqjPK

— Santiment (@santimentfeed) March 16, 2023

Meanwhile, BTC is changing hands at $26,472 as of press time, up by a massive 32.58% in the past week. Consequently, the global crypto market cap has increased by 4.43% in the past 24 hours, currently at $1.13 trillion.

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