Stablecoin Inflows Surge Following US Presidential Election and Federal Reserve Rate Cut
The cryptocurrency market has witnessed a significant surge in stablecoin inflows into exchanges following the US presidential election results on November 6th and the subsequent 25 basis point cut by the Federal Reserve on November 7th.
ERC-20 Stablecoins Flood Exchanges
According to data from market intelligence firm CryptoQuant, a substantial $9.3 billion worth of ERC-20 stablecoins were deposited into cryptocurrency exchanges in the wake of the US presidential election results. This marks the second-largest influx of ERC-20 stablecoins since their inception.
"This is a significant development that could potentially trigger another bullish rally in the cryptocurrency market," CryptoQuant noted in a post on November 7th.
The breakdown of the total $9.3 billion worth of ERC-20 stablecoin inflows into exchanges reveals that Binance’s share was approximately $4.3 billion, while Coinbase comprised around $3.4 billion.
Historical Precedent: Stablecoins and Price Rallies
Interestingly, large-scale inflows of stablecoins into exchanges have historically preceded price rallies in the cryptocurrency market. For instance, the 2021 bull run was preceded by an influx of stablecoins that occurred between September 2020 and February 2021.
Similarly, rising stablecoin inflows between January and early March this year saw Bitcoin’s price break previous all-time highs before the Bitcoin halving.
Stablecoin Flows into Exchanges
- $9.3 billion worth of ERC-20 stablecoins deposited into exchanges
- Binance: approximately $4.3 billion
- Coinbase: around $3.4 billion
Related Article: How High Can Bitcoin Price Go Before Trump’s Inauguration?
Stablecoin Inflows Spike as Traders Expect More Upside
The crypto community is abuzz with excitement following the US presidential election results, which many believe has ushered in a new era for the cryptocurrency market.
In a note to investors, QCP Capital expressed confidence that Bitcoin’s positive momentum will continue as the market enters 2025. Markets are now looking forward to "Trump’s proposed 60% tariff on China and fiscal concerns like the rising national debt," QCP Capital added in a follow-up note.
"We expect BTC to carry less risk premium compared to equities, potentially positioning it to outperform other risk-on assets."
Coinbase Premium Index Spikes
Meanwhile, the Coinbase Premium Index, a metric that tracks the Bitcoin price difference between Coinbase and Binance, spiked to 0.098 on November 6th, its highest since April 14.
Reacting to this metric, crypto community member Cobas said, "This signals rising US demand for Bitcoin, boosted by major inflows into spot ETFs from giants like BlackRock."
The index suggests that Bitcoin’s bullish momentum may continue and lead to a sustained market rally. All eyes are now on how Trump’s crypto stance might shape the market!
Sport Bitcoin ETFs See Giant Inflows
US-based sport Bitcoin ETFs continued to see giant inflows with more than $1.38 billion being poured into these investment products on November 7th, as per data from SoSoValue.
Of these, $1.1 billion in inflows went into BlackRock’s spot Bitcoin ETF (IBIT), whose flows flipped positive reclaiming inflow status after two consecutive days of outflows totaling $113.3 million.
This is the biggest inflow since January.
Total Spot Bitcoin ETF Flows
- More than $1.38 billion poured into sport Bitcoin ETFs on November 7th
- BlackRock’s spot Bitcoin ETF (IBIT): $1.1 billion in inflows
Now, market participants expect more significant inflows in the days to come, accompanied by Bitcoin price growth, as the market prepares for a new crypto era under Trump’s presidency.
Disclaimer
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.