A steady increase in the circulating supply of stablecoins shows an increasing demand for these assets. It suggests that more traders and investors are preparing to enter the market or facilitating more trading activity.
The increase in the aggregate circulating supply of stablecoins over the last six months represents a significant development. The aggregate supply of the five largest coins peaked at over $150.874 billion on June 16 — representing a substantial increase from the $124.890 billion recorded at the beginning of the year.
Stablecoins provide a haven during periods of market uncertainty and liquidity during periods of upward price movements. The increase in their circulating supply shows a shift towards stability and risk management among investors and an overall maturity in the market, which chooses to deploy its capital through stablecoins instead of fiat currencies.
The specific changes in the circulating supplies of individual stablecoins show how market preferences shifted throughout the year.
Tether remains a dominant force in the stablecoin market, with USDT supply rising from $91.71 billion to $112.48 billion. Similarly, USDC’s growth from $24.5 billion to $32.4 billion indicates strong demand for Circle’s stablecoin.
In contrast, the dramatic decrease in BUSD’s supply from $1.011 billion to $70.421 million and TUSD’s drop from $2.310 billion to $495.710 million reflects their significant regulatory challenges and decreasing investor interest.
The fact that DAI’s supply has remained constant at $5.347 billion suggests a stable demand for this decentralized stablecoin, which could reflect a preference for decentralized financial products in the market. The stability amid fluctuations in other stablecoins’ supplies shows a balanced demand for centralized and decentralized coins, each serving different needs and risk appetites within the market.
The 30-day change in stablecoin buying power on exchanges, which has increased in the past week without corresponding inflows of BTC and ETH, indicates a significant accumulation of these stablecoins on exchanges.
This accumulation suggests that traders are preparing for potential market moves and hedging against volatility. This behavior indicates the market is in a state of readiness, where…
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