The total supply of existing stablecoins doubled to $ 12 billion, following increased demand triggered by the 50% crypto price crash on March 12 (Black Thursday).
The conclusions of the last Research study by Coin Metrics, which is sponsored by Bitstamp, shows that it took a period between March 12 and the first half of July to add 6 billion stablecoins.
Before this addition, it had taken five years for the global supply to reach the initial 6 billion.
The report comments that the March 12 event was spurred by a massive sell-off in global stock markets as fear of Covid-19 suddenly set in.
Unsure of the future, global investors rushed out of the stock and crypto markets, causing a global dollar shortage.
For crypto-asset holders who couldn’t cash out, stablecoins proved to be a sanctuary, hence the high demand, the report explains.
“Switching to stablecoins allows investors to efficiently keep money on the sidelines without having to cash out completely in fiat currency and incur fees. This rush for security was likely a significant part of the increased demand for stablecoins after March 12. “
The data from the study appears to agree with the findings of Coin Metrics.
The data appears to show that within two weeks of the crash, “over 800 million new USDT_ETH were issued.” This contrasts with “about 740 million USDT_ETH (which) was issued from January 1 to March 11”.
The supply of another stablecoin, USDT_TRX, would increase to “over 2 billion by the end of June”.
Other stablecoins grew as well, but not more than a few hundred million. Tether, once again, led the way by a wide margin.
In addition, the results also show that addresses worth at least $ 1 million USDT_ETH hold about 4.35 billion units of the total supply.
On the other hand, addresses with $ 1,000 or less represent only a tiny fraction of the overall supply.
The data also shows that the amount of USDT_ETH held by these large addresses increased by a significant amount in late March and April, suggesting that the exchanges were suddenly holding larger amounts of stablecoins.
Coin Metrics suggests that exchanges make up a large portion of addresses with $ 1 million USDT_ETH or more.
The report adds that “it may also be due to the fact that the exchanges themselves convert fiat into stablecoins like USDT_ETH”.
Stablecoins make it easy to transfer money between exchanges and offer settlement functionality without the need for traditional wire transfers.
In the meantime, the results also appear to reaffirm Tether’s status as “the most prevalent in crypto-asset trading.” This probably contributes to its price fluctuation.
Stablecoins are used as a quote currency in crypto-asset pairs much more than fiat currencies on most exchanges.
A large majority of the volume and supply of stablecoin exchanges is dominated by tether (USDT).
Do you think the supply of stable coins will continue to grow at the same rate in the future? Tell us your thoughts in the comments section below?
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