Editor's Note: This article comes fromBabbitt Information (ID: bitcoin8btc), Translator: Kyle, published with permission.
Babbitt Information (ID: bitcoin8btc)
Babbitt Information (ID: bitcoin8btc)
Stablecoins (crypto assets backed by a “stable” reserve asset) have become increasingly important to the cryptocurrency market over the past few weeks. Stablecoins now account for a growing percentage of the crypto market capitalization.
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Image source: Tu Chong
In fact, the value of all stablecoins in circulation surpassed $9 billion for the first time, according to data from blockchain analytics firm Coin Metrics on April 20. What's especially interesting is that this statistic was $6 billion six weeks ago. The common narrative for this trend is that it is decisively bullish for the crypto market, with many believing that the rise in the value of stablecoins is a sign that investors are ready to put money into Bitcoin, Ethereum, and other cryptocurrencies. However, this statement may not be 100% true, some people think that the demand for stablecoins is increasing, and the reason may be other reasons (such as investors dumping other cryptocurrencies and exchanging for stablecoins), which actually shows that cryptocurrency investors feel Uneasy, or at least currently unwilling to buy Bitcoin.
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Rapid Stablecoin Growth Isn't 100% Bullish for Crypto
Over-the-counter traders "mainly from Asia" are looking to buy USDT. Although Bankman-Fried did not elaborate on this claim, it is a well-known fact that Chinese traders use Tether because they cannot gain access to the cryptocurrency market any other way. Some have also suggested that USDT is a great way to move money around the world even if people don’t want to engage with Bitcoin.
People are selling crypto assets in USDT to "hedge positions".
People are selling crypto assets into USDT to "de-risk".
Presumably, these points apply to other crypto stablecoins whose supply has grown rapidly over the past two months. The common thread between these three factors is that investors may not use USDT to buy Bitcoin at this time.
