After dropping for much of 2023, the total stablecoin supply has stalled according to some crypto proponents. They argue the change marks growing demand and a bullish sign.
But analysts debate if inflows genuinely signal sentiment for assets like Bitcoin, or relate to structural shifts like crypto deal settlement.
While the stablecoin decline has slowed in aggregate, USDC and USDT are diverging. USDC’s market cap plunged from $56B to $24B as USDT hit new highs above $85B.
The trends could show more crypto activity moving offshore from the US as regulation looms. Stablecoin flows aren’t clearly predictive of prices.
Factors like transaction volumes and on-chain primary market usage may be more insightful than supply alone. The nuance makes stablecoins an imperfect metric to gauge market strength.
While some strongly suggest inflows precede rallies, stablecoin analysis has limitations. At best it offers a window into appraisal, not definitive guidance on price trajectories or fundamentals.
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