Bitcoin (BTC) Price May Turn Lower as Crypto Exchanges See $1B USDT Withdrawal: IntoTheBlock

The previous two occasions when exchanges saw similar USDT outflows earlier this year occurred near local tops in bitcoin's price.

Cryptocurrency prices rebounded from last week's turmoil on Wednesday as bitcoin recovered to above $60,000 after briefly falling below $50,000 during the Aug. 5 crash.

But further upside might be limited – at least based on one metric that has foreshadowed recent local tops.

Crypto analytics firm IntoTheBlock noted that more than $1 billion of Tether's (USDT) stablecoin was withdrawn from crypto exchanges on Tuesday, marking the highest single-day exchange outflow for USDT this year.

"In recent cases where withdrawals exceeded $1 billion, bitcoin began a downtrend soon after, suggesting investors may be adopting a risk-off stance, moving funds to safer environments like cold wallets in anticipation of market volatility," IntoTheBlock analysts said in a note on Wednesday.

However, there are nuances to interpreting the data. While stablecoin deposits to exchanges are positive, signaling fresh funds arriving to buy assets, withdrawals are not always negative as users might move funds to decentralized finance (DeFi) to earn yield. Notably, yields for providing USDT liquidity in DeFi pools have been trending lower, DefiLlama data shows.

Bitcoin fell to $59,000 during Wednesday U.S. trading session, fully retracing yesterday's surge above $61,000 despite Wednesday's U.S. CPI inflation report reassuring expectations of an interest rate cut in September.

Zooming out, seasonal trends are neither in favor of higher crypto prices. Most of the time during bitcoin's history, August and September brought negative monthly returns, data compiled by CoinGlass shows.

Well-followed crypto analyst Miles Deutscher pointed out that bitcoin's current price action resembles last year's action. Then, BTC tumbled to $24,000 from the top of its range at $30,000 during a large leverage flush in August and traded mostly sideways for two months before commencing a rally in October.

"Retail interest is evaporating fast, apathy amongst existing market participants, lack of clear narratives," Deutscher tweeted on Wednesday. "This feels eerily similar to August-October last year."

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