Stablecoin growth is more important to the crypto bull market than Bitcoin ETF flows!
Stablecoins are one of the preferred options for investors in the crypto market as a way to maintain balance when cryptos become volatile. Stablecoins are digital assets with a fixed value. The price of which is fixed and is mainly pegged to one US dollar. It is a digital currency that bridges traditional (fiat) currencies with the world of digital assets.
Even such currencies are a key part of the infrastructure providing liquidity for transactions. Changes in their supply provide an important clue about the health of crypto markets, as market participants deposit fiat money (mint) to create stablecoins. The most popular stablecoins are Tether's USDT and Circle's USDC. These are the two largest stablecoins at the moment. MakerDAO's DAI and Hong Kong-based First Digital's FDUSD, the third and fourth largest stablecoins currently in supply, also held positions during this period.
Rapid stable coin supply expansion is currently underway and shows that “fiat money is rapidly shifting to crypto.
The supply of USDT and USDC, two of the most popular stablecoins, increased this month compared to last month and increased by $10 billion this month. The supply of stablecoins USDT and USDC increased by $10 billion in one month. Another important point is that although the supply of the currently leading stablecoins USDT and USDC has increased by $10 billion in the last 30 days. At the same time, it saw a doubling of flows into bitcoin ETFs.
We know that earlier this year, on January 10th, the much talked about Spot Bitcoin ETF was approved. And as a result we have seen the rise in the price of Bitcoin as well as the rise in the price of other altcoins. This year, however, crypto market watchers set demand for spot bitcoin exchange-traded funds to determine the price direction of the digital asset. One of these is keeping an eye on the supply of stablecoins. While supply growth is very important, crypto may be a more useful indicator of demand, and its rapid expansion suggests that prices will be higher. But many experts think it's too important to pay less attention to Bitcoin ETF flows at the moment. But it's important to note that stablecoin issuers are the new sheriffs in town these days. Which is driving this current market higher.
Currently the most popular and largest stablecoin in terms of supply is USDT which has grown by $2.4 billion in one week. Fiat money is migrating to crypto at a rapid pace. However, this trend continues today. This is because of ETF inflows. That may be due to the fact that savvy market participants collect yield from elevated futures funding rates with a so-called "carry trade."
A carry trade is one where funding rates - payments to traders based on the price difference between the futures contract and the spot market - have been near record-highs. This means that futures traders who have bets on high prices (long) pay short positions that benefit from falling prices. Where savvy investors buy spot BTC or shares of one of the spot-based ETFs. Then these savvy investors try to maintain a neutral position after buying shares. And for that they sell BTC futures of equal size and safely pocket the price difference as a yield.
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In the current market scenario we just cant ignore the value of stable coins and there are many reasons for that. I also see that the demand bar is stable on ruin and it is expected that by year 2028 it will cross even more..