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An analyst at New York-based financial and investment management firm Morgan Stanley said on Monday that crypto liquidity appears to be recovering. Morgan Stanley’s Sheena Shah highlighted in a note to investors that the stablecoin market capitalization is seeing fewer redemptions for the first time since April.
The crypto winter may be heating up as institutional investors have stopped cashing in on the crypto-economy’s two biggest stablecoins, according to a recent analysis written by Morgan Stanley’s Cryptocurrency Research lead Sheena Shah. The UK-based analyst went on to say that demand has also fallen among investors looking for leverage. There has been a massive lack of decentralized finance (defi) lending Shah detailed.
“There doesn’t seem to be much demand for re-mining in the crypto world at the moment,” Shah noted in the investor note published on Monday. “It will be difficult for this crypto cycle to bottom out without fiat influence growing or crypto influence increasing,” the lead cryptocurrency analyst at Morgan Stanley added.
Morgan Stanley’s Sha explained that last week the overall market capitalization of the stablecoin, which is currently valued at 153.26 billion dollars, has not fallen in value for the first time since April 2022. The Morgan Stanley analyst said “extreme institutional deleveraging” has taken a brief pause for now. Current market data shows that over the last 30 days the market value of tether (USDT) has risen by 2.6%, while usd coin (USDC) is down by 4.6%.
The Morgan Stanley crypto researcher noted the USDC market assessment, further noting that it started during the first week of July. “The decline in USDC market value started before the regulatory change and is similar to the decline seen earlier in the year between March and May,” Shah’s note to investors explains.
The crypto economy took some losses this weekend as its value fell from $1.18 trillion to $1.06 trillion on Monday afternoon (EST). People are expecting that the crypto economy could falter even lower in September, as the month is traditionally a bad month in terms of crypto market history. On August 21, the Twitter account called Bleeding crypto discussed how September was sour for crypto for the past four years in a row.
“Every year we see how bad September is for crypto, but you’d think ‘this time it’s different’ – you can choose to stick your head in the sand, I choose to listen to the market,” Bleeding Crypto tweeted. Despite the lower crypto prices, market participants believe that September could be different.
That’s because The Merge is expected to take place on September 15, and it has been speculated that ethereum (ETH) could skyrocket in value with the rest of the crypto-economy lifting as a byproduct. However, it is quite possible The Merge is already priced in as ETH saw significant gains last month which strengthened the crypto economy at the same time.
What do you think of the Morgan Stanley analyst’s note on crypto liquidity and fewer stablecoin redemptions? Let us know what you think about this topic in the comments section below.
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