Traders' confidence returns as over $1.6 billion in stablecoins flows into Binance.

Users of the Binance exchange have made deposits of up to 1.65 billion dollars into stablecoins, a large influx of capital often seen as a sign of new demand for spot cryptocurrencies, especially following the recent sell-off in the market.

This deposit coincides with the withdrawal of nearly 1 billion dollars in Ether from Binance, according to onchain analysis provider CryptoQuant. This also marks the second time this month that net stablecoin deposits on the exchange have exceeded 1.5 billion dollars, "highlighting a new wave of capital flowing into the spot market," as noted by Amr Taha from CryptoQuant.

The daily net inflow of stablecoins into Binance has surged recently | Source: CryptoQuantBinance, the world's largest cryptocurrency exchange by trading volume, is always closely monitored for signs of broader changes in the market. Last Tuesday, the exchange processed over $29.5 billion in transactions, nearly six times the volume of its second-largest competitor, nearly six times the trading volume of Bybit, according to CoinMarketCap.

Stablecoins play a key role as the main funding source for traders, and their movement onto exchanges often signals a readiness to buy coins.

This moment becomes particularly noteworthy on Tuesday, as cryptocurrency markets continue to experience a decline at the beginning of the week: Bitcoin and Ether have lost the gains made on the previous Friday, which were driven by remarks from Federal Reserve Chairman Jerome Powell regarding the possibility of interest rate cuts in September.

The recent volatility of the market stems from a liquidation of long positions on Bitcoin following a major sell-off over the weekend, when a whale sold 24,000 BTC on Sunday, causing significant selling pressure.

Bitcoin price chart | Source: Bitcoin MagazineBitcoin price temporarily dropped below 109,000 dollars on Tuesday, but has since risen slightly to 111,360 dollars at the current time.

The largest divergence between Bitcoin and M2 in two years

Bitcoin's price drop at the beginning of the week was highlighted as it marked the largest divergence in two years compared to its close correlation with the global M2 money supply — an important measure of the money circulating in the economy.

Since the outbreak of the pandemic, Bitcoin has shown a strong correlation with global M2, often with a lag of two to three months, providing traders with a relatively reliable guide on short-term price trends.

Source: BitcoinsensusHowever, as Raoul Pal, founder of Real Vision — one of the first to highlight this relationship — pointed out, the long-term correlation is stronger when measured against total global liquidity, rather than just relying on M2.

Source: Raoul PalAnother factor contributing to the recent volatility of Bitcoin is the steady outflow of funds from ETF funds in the US. According to data from CoinShares, Bitcoin ETFs recorded over 1 billion dollars in outflows last week.

Good news arrived on Monday, as these products recorded their first day of net inflow after six consecutive sessions of decline.

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