“Interest in the cryptocurrency markets has roared back, with bitcoin and ether both breaking their previous all-time highs. However just after the breakout things turned South, and the overall market, sans KNIGHTS, took nearly a 25% dip on a Fibo retracement” –– Paul Ebeling
While many investors and traders were calling for an end to this Bull market, the stablecoin printer continued to pump new capital into every corner of crypto. Several billion-dollar funds were announced and institutional investors were taking part, arguably for the 1st time in the short history of the asset class.
The growth of stablecoin supply is correlated to DeFi (decentralized finance) (TVL) total value locked for 2 reasons:
- New capital is adding buy pressure to crypto assets, boosting the dollar measure of TVL;
- New capital is looking to be deployed throughout DeFi to earn yield on trading fees, lending yield and on-chain derivatives.
Since the beginning of Y 2020, stablecoin supply has been almost “up only,” hinting that users may sell into stablecoins, but they are not leaving the sector.
Regardless of short-term price action, the adoption of stablecoins and DeFi applications by funds, institutions and individuals is a positive for the industry.
Innovation on Top of Ethereum will continue to connect DeFi with the outside world, and stablecoin growth should continue to be a strong measure of adoption.
Have a prosperous day, Keep the Faith!