On-chain data shows recent whale accounts hoarding stablecoins. This move can be a preparation step to start “bottom-fishing” the market.
On May 24, on-chain analytics platform Santiment reported that large wallet holders are currently not buying much Bitcoin. Instead, they are adding stablecoins, favoring USDC and DAI.
“Recently, sharks and whales have not changed their Bitcoin holdings. We see that this group has been actively accumulating stablecoins. This could increase their future purchasing power.”
According to the data, 37% of wallets hold between 100,000 and 10 million USDC. Furthermore, 39% of wallets in the same pool are holding MakerDAO’s stablecoin DAI. Only 6.4% of whale wallets are holding Binance USD (BUSD). There is no data on Tether holdings.
Whales PREPARING ANOTHER DISCOUNT BOOK?
There has been an increase in stablecoins in whale pools since mid-April. This coincided with Bitcoin hitting a 2023 high of $31,000. Since then, BTC has dropped 13.7%.
The move by whales to buy stablecoins can be seen as a signal to wait to catch the bottom. However, it can also be used to “fill” short positions on Bitcoin.
Likewise, the inflows to the exchange have also dropped to the lowest level in the cycle. This may indicate an increased “HODL” status. As reported by BeInCrypto, decreased exchange liquidity can lead to increased volatility in the crypto market.
Regardless of what whales are doing with their stablecoins, there is already a big difference in the stablecoin ecosystem.
The market capitalization of Tether USDT and Circle USDC is also quite far apart. Tether’s market cap is growing while Circle is shrinking. On May 23, researcher Jim Bianco observed this, remarking that “they are going against conventional wisdom.”
There is a lot of negative sentiment surrounding Tether in 2022 after the collapse of Terra/Luna and FTX. However, the situation reversed in 2023 after rival Circle lost its USDC peg due to exposure to Silicon Valley Bank (SVB). Bianco notes:
The collapse of SVB, the crypto crackdown, and the impending debt ceiling/default have completely turned the tide, putting USDC at a disadvantage, giving Tether an opportunity to get ahead.
ECONOMIC PROSPECTS STABLECOIN
Tether currently has a 63.6% share of the stablecoin market with a circulation of $83 billion. Additionally, the USDT supply has increased by 25.4% since the beginning of 2023.
In contrast, Circle’s supply fell 34% during the same period. This has reduced its market share to just 22.5%, with 29.3 billion USDC in circulation.
US regulators also targeted Paxos and BUSD in February. The halt in money printing caused its supply to drop by 67.5% since the start of the year.