While everyone is waiting for a movement from the Bitcoin exchange rate, another „cryptocurrencies“ is becoming increasingly relevant. Due to the economic turbulence in 2020, which has hit not only Bitcoin but all other assets hard, the demand for Stablecoins has increased many times over.
Stablecoins are dry powders for Bitcoin and Co.
If we look at the current data for the various stablecoins, we can see enormous growth. In the last six months the market capitalization of the various Stablecoins has doubled. On average, about USD 1 billion of different stablecoins have been added each month.
One of the main reasons for this development is the global economic problems. Many people are fleeing into the US dollar because they still see it as a „safe haven“. And it is often people for whom access to the US dollar is severely restricted or even forbidden. Countries such as Argentina and Venezuela are particularly worthy of mention here. Therefore, the only alternative left is a stablecoin, which is covered by USD. „Cash“ is apparently still King.
This trend could ultimately be very positive for Bitcoin. This is because the various Stablecoins are considered „dry powder“ – this is what the traditional financial market calls money that has been collected from professional investors but not yet invested. This could well be the catalyst for the next Bitcoin Bullrun. Especially if the US dollar finally feels the effects of the strong inflation that has been driven to the extreme by the Federal Reserve (the central bank of the USA) in recent months.
Stablecoin transaction volume exceeds BTC and ETH
The decreasing volatility of Bitcoin has also led to a stagnation of the transaction volume of BTC On-Chain. Nevertheless, compared to 2019, not much less is transferred on-chain. The transaction volume fluctuates strongly but remains more or less the same on average.
In June 2020 the time had come. The transaction volume with Stablecoins exceeded the transaction volume of Bitcoin for the first time. This is a historical event and shows a certain trend.
The crypto data aggregator Unfolded has published a chart on Twitter that shows the transaction volumes of Bitcoin, Ethereum and Stablecoins over time. The Tweet states: „In June 2020, the value transferred with Stablecoins exceeded the value transferred with BTC for the first time“.
Tied capital shows strong increase in the last 6 months
Unfolded has also provided a chart showing the current supply of stablecoins. The amount of Stablecoins in circulation is currently USD 12 billion. This is a twofold increase compared to the beginning of the year.
After it took 5 years for the capital tied up in Stablecoins to reach 6 billion, it only took 4 months after the crypto-crash on March 12th to rise from 6 billion to 12 billion.
Bitcoin Bullrun by Stablecoins?
Since the barrier to switching from a Stablecoin to Bitcoin or other cryptocurrencies is quite low, many investors consider Stablecoins as „dry powder“. Accordingly, this „dry powder“ could be used as soon as the Bitcoin price gives a clear direction. Until then it will remain on the substitutes‘ bench for the time being.