Bitcoin Plunge Signals Opportunity to Buy as USDT Flow Peaks in Six Months

Key Points

• USDT on-chain activity has reached a six-month high, with 143k wallets transferring funds.
• This surge coincides with a market-wide price drop, suggesting potential trader accumulation.

USDT Activity and Market Sentiment

USDT’s on-chain activity has seen a significant spike, reaching a six-month peak with 143,000 wallets transferring funds. This increase comes amidst a broad market price drop.

Typically, a surge in Tether network activity can be indicative of risk-off sentiment and strategic accumulation. However, with the crypto market losing over $200 billion following Bitcoin’s (BTC) drop below $80k, the rise in USDT activity coupled with market decline suggests a favorable “dip-buying” setup.

Liquidity Influx and Market Response

This trend is further reinforced by net flows turning positive, with USDT inflows into exchanges surging over $2 billion – the highest this month. This liquidity influx coincided with Bitcoin’s drop to $77k, its lowest level in four months, signaling potential accumulation and fuelling its 7.70% rebound to $83k.

A similar pattern was observed in September 2024. Daily active USDT addresses spiked, with 53,767 new wallets created in a single day as BTC dipped to $56K. That quarter, Bitcoin surged over 70%, marking a significant bull run. However, current external conditions contrast sharply with past trends.

Despite the rise in Tether activity, the Fear and Greed Index remains in the high-fear zone, suggesting accumulation has yet to take hold. While high Tether activity points to both strategic positioning and risk-off sentiment, over $1 billion in USDT outflows into exchanges indicates caution is still present among traders.

Furthermore, Bitcoin ETFs saw a net outflow of 3,954 BTC (-$324.12M), intensifying sell-side pressure. BlackRock’s iShares ETF led the outflows, shedding 1,819 BTC (-$149.07M), reinforcing a defensive stance among institutional investors. With sentiment fragile and traders prioritizing short-term price swings, BTC’s 7.70% surge may face resistance unless sustained accumulation emerges to drive a breakout.