Stablecoins seems to be the only game in town.
While many focus upon the old time coins like Bitcoin and Ethereum, it seems the metric is the stablecoin market. This is rapidly taking over as the key to all crypto moves.
From a market perspective, most crypto is purchased using stablecoins. Since the total available is fluid, with inflows and outflows occurring regularly, any increase in the market cap is a sign of optimism.
Recently, we saw a rebound in the stablecoin market where it is now near the all time high of $309 billion.
With Bitcoin off significantly from its highs, many are wondering whether a larger bear is looming. While this debate takes place, stablecoins are telling a different story.
The fiat-pegged token realm keeps expanding, and data from defillama.com shows that the latest $2.26 billion boost reflects a 0.74% lift from the week before. As of Saturday, Dec. 6, the stablecoin total sits at $308.435 billion. The sector needs only a modest 0.1864% nudge to clear its all-time peak.
This means the total number of coins expanded. Billions were pushed into these assets, bringing more money into the system.
What are these coins used for? At this point, most stablecoin activity is relegated to the financial world. Commercial use is still lagging. Hence, the connection between stablecoin increase and potential market moves only makes sense.
Does this mean crypto is going to rebound? Obviously, this is going to happen at some point. The timing, as always, is the question. There is no way to tell if it will occur next week or in 6 months.
That said, the fact that stablecoin growth might be back on track means we are going to see more focus outside the price of Bitcoin. Again, this grabs the headlines but the underlying activity is within the stablecoins. That is the liquidity measure many financial people are looking for.
The crypto industry is being broken into smaller segments. To me, this is going to be akin to the term "technology". When looking at this, we can go many different directions with the analsys.
Crypto is going to be no different. That will be an encompassing term yet have many components that make up the industry.
Think of it as an industry within an industry.
Stablecoins can also be broken down as we see size differences within the market itself.
With stablecoins jockeying for position and capital flowing in from every direction, the sector looks poised to topple its previous record with just the slightest push at some point this week. Whether it’s heavyweight tokens adding billions or smaller players bobbing through the week’s ups and downs, the market’s steady climb suggests the race toward a new pinnacle isn’t slowing anytime soon.
What caused the upward move is not relevant. A market captures all the moves, often going through rotation.
The important factor is the overall move. In this case, it is higher.
Confidence is what is always behind all market activity. If it is high, people will enter. The opposite is true when it is low.
Naturally, we cannot draw a trend from one week's worth of data. The stablecoin market reaching another all time high is going to be crucial. My expectation is that we will see $320 billion in the first quarter of next year.
Remember, the expectation is that trillions of dollars in stablecoins will be created. For this to happen, a ton of liquidity is going to flow in. What impact does that have on crypto assets if the major utility is still financial?
It is easy to see how this will cause upward pressure. Once again, timing is the difficult aspect to all this. In the short-term, we could be awry. Over a longer period of time, however, it is likely to pan out.
