Tether’s USDT on the Ethereum network saw its largest exchange outflow in months on May 9, with $1.29 billion moving to self-custody in a single day, according to on-chain analytics firm Santiment. A stablecoin is a type of cryptocurrency whose value is pegged to another asset, typically a fiat currency like the U.S. dollar.
"The outflow represents a significant shift of the stablecoin from centralized trading platforms to private wallets, a trend that on-chain analysts often interpret as a precursor to reduced selling pressure," Santiment noted in a report published on May 9.
The movement of such a large volume of stablecoins, which are often used to facilitate the buying and selling of other cryptocurrencies, is closely watched by market participants. This specific outflow exceeded spot inflows by a significant margin, a pattern also recently observed in the XRP market where outflows of $115 million surpassed inflows of $99 million, per CoinGlass data.
This large-scale movement of stablecoins could be signaling preparation by large holders, or 'whales', to deploy capital in decentralized finance (DeFi) protocols or to hold assets for the long term. While not a direct indicator of a price rally for assets like Bitcoin or Ethereum, it reduces the immediate supply of USDT available for sale on exchanges, which is often considered a bullish precursor.
The interpretation of exchange outflows as a sign of accumulation is a common thesis in crypto analysis. The logic is that investors who intend to sell in the short term would keep their assets on an exchange for easy access. Moving funds to a private, or self-custody, wallet implies a longer holding period. This trend has been visible across the market, with spot Bitcoin ETFs recently recording six straight weeks of net inflows totaling $3.4 billion, according to SoSoValue data.
However, a degree of caution is warranted. Large outflows are not always a direct signal of new accumulation. They can also be the result of large-scale internal wallet reshuffling by exchanges or other large crypto entities, custodial changes, or large over-the-counter (OTC) transactions that do not directly reflect buying pressure on the open market.
This article is for informational purposes only and does not constitute investment advice.
