The amount of stablecoins witnesses nearly a 30% rise since the beginning of the month. USDT (Tether) has alone increased from $4.8 billion to over $6.19 billion since March 1, 2020.
We notice that the metrics on CoinMarketCap and TradingView might be wrongly reporting the data, missing one of the networks on which USDT is issued. Bitcoin core developer and the CEO/co-founder of Blockstream, Adam Back, told us that,
tether is issued on multiple networks. I think CMC is missing one or more of the networks
As it continues to report a volume of nearly $4.6 billion, it seems like OMNI data has been omitted from their calculations.
Moreover, the rise is not only limited to Tether, but also across all altcoins like USDC, TUSD, PAX and so on. Nic Carter, on-chain crypto analyst and co-founder of Coinmetrics tweeted last week,
Anyone else notice stablecoins absolutely skyrocketing? Tether is the big winner but USDC has also added $140m in the space of a week (it added another $57 million in the last week)
What Does the Rise Imply?
While an increase in the total market capitalization of cryptocurrencies is good for the industry, the rise in stable-coins could be possibly due to,
- The FED inducing nearly $6 trillion worth of US Dollar liquidity in the market to prevent the economy from falling into depression, and to aid it’s citizen in fighting against the virus, or
- Due to a sell-off of risky crypto assets as traders move to cash.
Tom Shaughnessy, a crypto analyst and co-founder of Delphi research notes,
Interesting. Think it’s from traders/investors exiting riskier cryptos or maybe even demand for the USD driving people to buy USD pegged stablecoins, or both?
In the past, rise in the volume of Tether has acted as a precursor to the rise in the Bitcoin and crypto-markets as more volume enters the crypto-markets. It also implies that the traders might waiting on the sidelines waiting for a better (cheaper) entry into the markets, as Coronavirus situations seems to be getting worse with each passing day.
Do you think that crypto-market is preparing for a bull run or another dump? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com