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Top-tier centralized and decentralized stablecoins pegged to the U.S. Dollar are back to surging after a record-breaking 10-month decline. Typically, such action is a reliable bullish signal, data says.
After 10 painful months, stablecoins started gaining traction, IntoTheBlock says
As per a statement made by IntoTheBlock on its official Twitter account yesterday, on Jan. 27, 2023, largest centralized stablecoins U.S. Dollar Tether (USDT) and USD Coin (USDC) started increasing their supplies together with the major decentralized stable asset Dai (DAI).
After declining for 10 months, the market cap of #USDT, #USDC and #DAI shows a monthly increase.
????The total amount of stablecoins impacts liquidity available in the crypto space
????Stables market cap bottomed a week after FTX and began increasing, pointing to increasing demand pic.twitter.com/d1QDAnNp6u
According to statistics shared by IntoTheBlock, the aggregated capitalization of the three assets started growing shortly after the FTX/Alameda collapse. The drama of SBF-backed entities ended the prolonged "correction" of the stablecoin segment that started with the Terra (LUNA) crash in May 2022.
As displayed by CoinGecko, some smaller stablecoins demonstrated even more impressive supply upsurges. For instance, True USD's (TUSD) circulation is up 25% since mid-December and is ready to enter the 10-digit waters for the first time.
The seventh largest stablecoin Pax Dollar (USDP) has had its circulation increased by 5%, while Liquidity USD (LUSD) is one step away from the top 10 after a whopping 24% spike.
Fuel for new rally?
Meanwhile, some other major stablecoins, including Binance USD (BUSD) and Gemini USD (GUSD), are still reducing the supply of their assets available on-chain.
Typically, upsurges in stablecoin capitalization are a bullish signal for crypto markets' capitalization: traders need more stablecoins to push Bitcoin's (BTC) and altcoins' prices higher.
As covered by U.Today previously, seasoned analyst Charles Edwards stressed that stablecoins are a form of money "parked" within the crypto industry.
RelatedBitcoin Bottom Is In, Seven Signals Say: Analyst Charles Edwards
As such, investors store them to use as "dry powder" once a Bitcoin (BTC) rally starts.
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