Stablecoin market cap drops, whales unaffected Santiment.
According to Santiment, a leading crypto analytics firm, the stablecoin market has experienced a decrease in market capitalization despite stablecoins maintaining their $1 peg to reserve assets like the US dollar. The top five stablecoins, namely Tether, USD Coin, Binance USD, Dai, and TrueUSD, have been experiencing a consistent decrease in market capitalization since March 2022. The market capitalization of stablecoins serves as a reliable indicator of the overall health of the crypto market. An increase in market cap indicates an increased buying power to purchase Bitcoin or altcoins in the future, often hinting at a potential market recovery, while a declining market cap could indicate that Bitcoin and altcoins are being liquidated, suggesting that large holders are banking profits.
Large holders, also known as ‘whales’ or ‘sharks,’ play a crucial role in market dynamics. Despite the decreasing market cap, Santiment’s analysis reveals that these whales holding Tether, USD Coin, and Dai currently command over 40%, 37%, and just under 40% of the respective supplies. These holdings are the highest they’ve been since November 2021 or February 2023, suggesting that these whales are merely holding their wealth in stablecoin form, biding their time for an opportune moment to jump back into other more volatile assets.
While the collective stablecoin market cap has been dropping, Santiment notes a steady accumulation of assets among whales. The recent weeks have also seen minimal movement among dormant stablecoins, which could have suggested major buys of Bitcoin or altcoins. Although USD Coin has shown some promising dormant movement at the end of May, the activity falls short of the dormant stablecoins surge witnessed in mid-March, which ignited a notable bull rally.
Currently, the total stablecoin market capitalization stands above $120 billion, down by nearly 1% in the past 7 days. Tether’s USDT holds the most dominance at 64.57%. The decreasing stablecoin market may benefit larger crypto assets such as Bitcoin and Ethereum, which have shown an uptick of nearly 1% respectively in the past 24 hours, despite regulatory scrutiny in the crypto space affecting major crypto exchanges like Binance and blockchain.