Almost $140 billion in Stablecoins ready to re-enter the crypto markets
Crypto markets stabilized in July without any final capitulation event as many had predicted. There is now a large sum sitting in stablecoins waiting to re-enter the markets when the time is right.
Three of the top ten crypto assets by market capitalization are stablecoins. Their combined value at the time of writing is $138 billion, according to CoinGecko.
Tether’s USDT is the third largest cryptocurrency with $66 billion, Circle’s USDC is fourth with $54.4 billion and Binance’s BUSD is seventh with $17.8 billion.
July 31, Binance CEO Changpeng Zhao pointed out that this was a lot of money sitting on the sidelines waiting to come in again.
“If people wanted to get out of crypto, most people don’t want stablecoins.”
Cash on the sidelines
Those who need to exit crypto would have converted back to fiat and withdrawn from exchanges. This mostly happened in mid-June when over $400 billion left the markets in one week.
Since then, crypto markets have generally been capped with a recent rally to push total capitalization to $1.17 trillion, up 33% from the cycle low of $875 billion.
The amount in the top three stablecoins is 12% of the entire crypto market value. It remains historically high despite falling over the last month or so with the shrinking Tether supply and less market rally.
The elephant in the room is inflation. With most of the world suffering from a cost of living crisis, retail traders simply don’t have the same amount of money to throw into high-risk assets like crypto. Until there is a significant reduction in inflation, crypto markets are unlikely to turn bullish.
High inflation is another reason to keep currencies stable for those in countries that see the USD as a hedge against their own currency. Several Latin American nations have double-digit inflation and stable coins are in demand.
The crypto markets are cooling down
After a weekend of consolidation, there has been a slight decline in total market capitalization during Asian trading on Monday morning. Markets are down 1.2% to $1.13 trillion at the time of writing.
Bitcoin has fallen 1.7% on the day to trade at $23,323 while Ethereum is down 0.6% at $1,687, according to CoinGecko. Most altcoins today are in the red with a few double-digit percentage losses.
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