Global Shortage of US Dollars Fueling the Demand for Stablecoins

Must Read

Bitcoin Sees an Influx of Retail Interest with Investors Doubling Down on HODLing

After tumbling down to below $6,500 yet again, Bitcoin went back above $7,000 in...

Grayscale Reports Q1 2020 Quarter, Hedge Funds Buying Bitcoin Dips

The Q1 2020 was all about significant volatility after we started a new year...

Wyoming Amends Insurance Code to Allow Insurance Companies to Invest in Bitcoin & other Cryptos

In the first provision of its kind, Wyoming is allowing the domestic insurers to invest...
- Advertisement -BTCClicks.com Banner
Earn Free Bitcoin

The volatility of cryptocurrencies has fallen back to the previous level from the recent highs after the global financial markets stabilized in response to the monetary policy tools used to inject liquidity used by central banks all over the world.

While crypto assets are getting stagnant, stablecoins across the board recorded a significant increase in their issuance over the past month and so.

Some of the market participants believe it to be so because of the increased need for these stablecoins to ride out market volatility, some to the continued growth in the lending market for them while others point to the increased retail activity and users buying the dip.

According to crypto data tracker Coin Metrics, it could also be because of the “global shortage of US dollars.”

The global reserve currency is the center point of a vast majority of global commerce and commodities are also priced and transacted in USD. Moreover, foreign companies and governments issue large amounts of US-dollar denominated foreign debt.

During the past few months, the demand and supply of global trade were affected and the flow of the US dollar declined to a small stream.

“On the margin, stablecoins should benefit from the global shortage of dollars,” wrote coin Metrics.

This shortage in the dollar, especially on March 10 when it became severe and the USD index jumped about 8%, the supply of second-largest stablecoin USD Coin, a joint effort of Circle and Coinbase, increased by over 50%.

However, since then the dollar has given up some of these gains after the Federal Reserve started dollar swap lines with major central banks. The issuance of USD Coin also saw slower growth in response.

Stablecoin Printer Going Brrr Since Bitcoin Crashed

These fiat-backed cryptos have been actually surging ever since the price of Bitcoin crashed to $3,850 in mid-March. Companies have been printing these fiat substitutes in the crypto market like crazy.

During this time, Binance’s stablecoin BUSD recorded the biggest surge of 85% in its market cap followed by USDC’s 55%. The market cap of Paxos and USDT (Tether) also increased by 20% and 40% respectively.

“The Fed isn’t the only institution that’s been printing away. Crypto finds its Jerome Powell in the form of stablecoins, which have been going BRRR since the BTC lows,” said trader Hsaka.

Over the past few months, Tether has moved onto other blockchains as well viz. Tron, EOS, Liquid, Algorand, and Ethereum. However, Ethereum-based Tether (USDT-ETH) remains the most popular as it’s usage continues to climb.

Ethereum-based Tether’s daily transactions spiked on April 7th to its highest daily total at 143.32k since Sept. 2019. Omni Tether (USDT) and Tron Tether (USDT-TRX) are still significantly fewer daily transactions than USDT-ETH.

According to the data shared by JGZ.com and Jin Guo Zi APP, Huobi dominates the USDT transactions followed by Binance, OKEx, and Bitfinex.

- Advertisement -
- Advertisement -

Latest News

Wyoming Amends Insurance Code to Allow Insurance Companies to Invest in Bitcoin & other Cryptos

In the first provision of its kind, Wyoming is allowing the domestic insurers to invest...
- Advertisement -Earn Free Bitcoin

Its’ Finally Here A 100% Local Non-Custodial P2P Cryptocurrency Marketplace.

Finfreeotc is soon launching a one of a kind peer to peer cryptocurrency market place. Their marketplace is 100% non-custodial,...

WorldMarkets continues with the success of its trading artificial intelligence

Today we live in the information age, and access to information is unlimited. And that produces the paradox of misinformation. That's why...

MyTvchain.com Records Growth for The First Blockchain ​​Web Tv Platform Dedicated to Sport Clubs And Athletes

Sophia Antipolis (France) and Singapore: The first web TV platform dedicated to sports clubs and athletes opened in...

Crypto-Broker Instacoins Receives Operating License in Estonia

Instacoins Estonia OÜ, a cryptocurrency brokerage, is pleased to announce it has received an operating license from the Estonian Financial Intelligence Unit (FIU). The...