On-chain data impliesย that whale accounts have been stashing cryptoย stablecoins recently. The move mayย be in preparation toย begin buying cryptocurrency again.
On May 24, on-chain analytics provider Santiment informed that big bag holders are not buying much Bitcoinย (BTC) asย ofย now. Instead, they have been loading up on cryptoย stablecoins, favoring USDC and DAI.
โAs sharks and whales remainsย stable on their Bitcoinย (BTC) holdings, we are seeing that cryptoย stablecoins have been accumulated by these large holders, increasing their future implied buying power.โ
Reportsย 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 MakerDAOโs DAI cryptoย stablecoin. Just 6.4 percent of whale wallets were holding Binanceย Cryptoย exchange USD (BUSD). There was no data on Tetherย (USDT) holdings.
Whales Holding For Another Dip?
There has been an uptick in whale cryptoย stablecoin positions since mid-April. This coincided with BTCโs 2023 peak price of $31,000. Everย since, the investment has retreated 13.7 percent to current prices as profit has been taken.
Whale movement into cryptoย stablecoins couldย be seen as waiting to buy the dip. Nonetheless, itย canย potentially likewise be used toย finance short positions on Bitcoin.
Similarly, exchange inflows have likewise fallen to cycle bottomย Line, which could signify increased hodling. Accordingย to BeInCrypto, the reduced exchange liquidity could spell increased volatility in cryptocurrency markets.
Regardlessย of what whales are doing with their cryptoย stablecoins, there has been a large divergence in the cryptoย stablecoin ecosystem.
Tetherย (USDT) and Circle USDC marketย caps are likewise moving apart. Tetherโsย (USDT) marketย capitalization is increasing while Circleโs is shrinking. On May 23, researcher Jim Bianco observed this, commenting that โthey are moving opposite the conventional wisdom.โ
The sentiment was very anti- Tetherย (USDT) in 2022 following the Terra/Luna and FTXย Tradingย Ltd collapses. Nonetheless, it turned against Circle in 2023 after it de-pegged following exposure to Silicon Valley Bank. Bianco noted:
โThe 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.โ
Cryptoย Stablecoin Ecologicalย system Outlook
Tetherย (USDT) asย ofย 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, Circleโs supply has shrunk by 34 percent in the same period. This hasย decreased its market share to just 22.5%, with $29.3 Billion USDC in circulation.
Unitedย States regulatoryย authorities targeted Paxos and BUSD in February. Minting was halted, and supply has slumped 67.5 percent since the beginning of the year.
