Stablecoin Accumulation on the Rise Since April

Stablecoin Accumulation on the Rise Since April

Whale accounts are accumulating stablecoins, potentially in preparation for buying crypto again, according to on-chain data, with USDC and DAI being the favored stablecoins.

On-chain data implies that whale accounts have been stashing crypto stablecoins recently. The move may be in preparation to begin buying cryptocurrency again.

On May 24, on-chain analytics provider Santiment informed that big bag holders are not buying much Bitcoin (BTC) as of now. Instead, they have been loading up on crypto stablecoins, favoring USDC and DAI.

“As sharks and whales remains stable on their Bitcoin (BTC) holdings, we are seeing that crypto stablecoins have been accumulated by these large holders, increasing their future implied buying power.”

Reports by the data, 37 percent of wallets holding betwixt $100,000 and $10 Million hold USDC. Furthermore, 39 percent of wallets in the same cohort are holding MakerDAO’s DAI crypto stablecoin. Just 6.4 percent of whale wallets were holding Binance Crypto exchange USD (BUSD). There was no data on Tether (USDT) holdings.

Market Warning: Morgan Stanley Strategist Predicts Bearish Cycle and Investors Being Fooled by Liquidity Spike

Whales Holding For Another Dip?

There has been an uptick in whale crypto stablecoin positions since mid-April. This coincided with BTC’s 2023 peak price of $31,000. Ever since, the investment has retreated 13.7 percent to current prices as profit has been taken.

Whale movement into crypto stablecoins could be seen as waiting to buy the dip. Nonetheless, it  can potentially likewise be used to finance short positions on Bitcoin.

Similarly, exchange inflows have likewise fallen to cycle bottom Line, which could signify increased hodling. According to BeInCrypto, the reduced exchange liquidity could spell increased volatility in cryptocurrency markets.

Regardless of what whales are doing with their crypto stablecoins, there has been a large divergence in the crypto stablecoin ecosystem.

Tether (USDT) and Circle USDC market caps are likewise moving apart. Tether’s (USDT) market capitalization is increasing while Circle’s is shrinking. On May 23, researcher Jim Bianco observed this, commenting that “they are moving opposite the conventional wisdom.”

The sentiment was very anti- Tether (USDT) in 2022 following the Terra/Luna and FTX Trading Ltd collapses. Nonetheless, it turned against Circle in 2023 after it de-pegged following exposure to Silicon Valley Bank. Bianco noted:

“The combination of the SVB episode, the aggressive regulatory moves to crush cryptocurrency, and the looming debt ceiling/default have completely turned the tables against USDC and in favor of Tether.”

Tether (USDT) and USDC market capitalizations – Twitter/@biancoresearch
Tether (USDT) (USDT) and USDC market caps | Twitter/@biancoresearch

Crypto Stablecoin Ecological system Outlook

Tether (USDT) as of now commands a dominant market share of 63.6 percent with a circulation of $83 billion. Furthermore, the USDT supply has grown by 25.4 percent since the beginning of 2023.

Conversely, Circle’s supply has shrunk by 34 percent in the same period. This has decreased its market share to just 22.5%, with $29.3 Billion USDC in circulation.

United States regulatory authorities targeted Paxos and BUSD in February. Minting was halted, and supply has slumped 67.5 percent since the beginning of the year.


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