Cryptocurrency invertors are pulling billions of dollars from stablecoin. Over the last 30 days the total supply of these digital dollars shrank by $14.2 billion. Now this is the biggest and fastest drop the crypto market has seen since crash of 2022.
Stablecoins like Tether (USDT) and USD Coin (USDC) are cryptocurrency pegged to the value of regular US dollar. Crypto traders usually keep their money in stablecoins when they want to store cash safely on a crypto exchange without moving it back to traditional bank.
Why is this money leaving crypto
The main reason for this drop are investors are trading their crypto stablecoins back to real cash. Right now traditional US government bonds are paying around 4.1% interest. Because standard stablecoins do not pay any interest, investors are moving their money back to traditional banks to safely earn a return. At the same time big investment funds have been pulling money out of Bitcoin ETFs showin that people are generally pausing their crypto investments.
While billions of dollars leaving stablecoins it directly means that there is much less cash left in cryptocurrency exchanges. Without this cash ready to buy it become much more harder for Bitcoin and also other cryptocurrency to bounce back from price drops.
Twist is people are using stablecoins for real world shopping
Even though the amount of stablecoins in market is shrinking but people are still paying and using them for daily life everyday things. In fact, the total amount of money sent using stablecoins jumped by 45% this year.
This tells us people are doing less risky crypto trading but they are still heavily using stablecoins to buy goods and send that money to other countries. However for crypto market to start boom again this cash drain so needs to be stopped so that way fresh money can flow in system.
Now what you think the reason of that drop was? is using stablecoins for daily needs effects that much? let me know in comments section!
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