The recent cryptocurrency market crash has increased the share of stablecoins, including Tether (USDT), in the market. According to Wall Street banking giant JPMorgan, this could signify that the trend will reverse and the market will make notable gains.
JPMorgan says stablecoins show market is bullish
Analysts at JPMorgan Chase, an investment bank based in the US, have said that the number of stablecoins within the total market value of the cryptocurrency market had increased to major highs by mid this month.
The analysis conducted by JPMorgan was led by Nikolaos Panigirtzoglou, a cryptocurrency market analyst. According to an investor note, the analysts offered insight into what was happening in the cryptocurrency market.
The investor note was published on June 15, saying that the share of all the stablecoins in the crypto space had increased to more than 15%. The share had reached a “historical high,” according to the analysts.
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“The share of stablecoins in total crypto market cap looks excessively high, pointing to oversold conditions and significant upside for crypto markets from here,” the JPMorgan analysts said.
In April this year, the strategists predicted that a short-term dip in cryptocurrency prices would be witnessed. At the time, the share of stablecoins against the total cryptocurrency market dropped from 10% to 7%.
The current data depicts a notable increase in the percentage of stablecoins in the market. This number has increased to high levels and currently stands at 17%. Data provided by CoinGecko shows that the value of all stablecoins in the market has grown to $155 billion. On the other hand, the global market cap sits at around $946 billion, depicting the strategists’ argument that an uptrend was on the way.
Stablecoins affected by the recent market crash
The share of stablecoins in the market has steadily increased over the past few weeks despite these tokens being under pressure following the cryptocurrency market crash. During the second quarter of 2022, the supply of stablecoins in the market dropped significantly. Stablecoins are the best cryptos to buy during crashes due to their stability.
However, investor faith in stablecoins dropped after the collapse of Terra (UST). The algorithmic stablecoins dropped to $0 in just a few days as Terraform Labs failed to repeg the coin. Stablecoin issuers such as Tether have been reassuring their investors that their investments are safe to avoid panic redemptions that could depeg these tokens.
The USDD stablecoin from the Tron blockchain has also failed to achieve its peg again due to the devaluation of TRX following the market recession.
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Read More:Stablecoin Market Cap Means Crypto is Bullish – JPMorgan
