The bitcoin price has this week bounced around the closely-watched $20,000 per bitcoin level while the ethereum price has built some support above $1,000 per ether. Other top ten cryptocurrencies—BNB BNB , XRP XRP , solana, cardano and dogecoin—have also inched higher, adding more than $100 billion to the combined crypto market capitalization from its recent lows.
“The amount of money sitting on the digital sideline has never been greater and points to an abundance of patient investors ready to pounce on discounted digital assets,” Digital Asset Investment Management (DAIM) analysts wrote in a recent report, pointing to the growth of Tether’s USDT, Circle’s USDC, Binance’s BUSD, and MarkerDAO’s DAI.
Those four dollar-pegged stablecoins have risen more than 20-fold—from $7 billion to $147 billion—over the last two years.
“That means the ecosystem has an additional $140 billion ready to be deployed into bitcoin and altcoins,” DAIM researchers wrote, noting the stablecoins also provide shelter from crypto storms and wild price swings.
Meanwhile, research from Australian-based digital asset manager Zerocap, first reported by Blockworks, found that as the combined crypto market cap crashed 70%, from $3 trillion to $900 million, the circulating supply of the top four stablecoins increased by almost 13%.
“The net growth in stablecoin supply is wholly indicative of users holding funds on-chain as opposed to retreating into dollars,” Zerocap told Blockworks. “A portion of the stablecoins sitting on-chain are likely held there while investors dollar cost average into investments or are sitting idly, waiting for an opportune time to allocate.”
Circle’s USDC has seen its supply grow by around 60% over the last eight months, giving it a market cap of $55 billion, Zerocap found—putting USDC in touching distance of tether’s $65 billion. Conversely, USDT’s circulating supply has shrunk recently as investors cash out.
“The immense growth of USDC relative to its peers is indicative of a surge in investors valuing clarity around stablecoin backing,” Zerocap said, referring to how various stablecoins maintain their dollar peg. “The Terra crash burnt a large percentage of users in the space and likely caused many to re-evaluate the quality of backing behind the (intended) stable portion of their portfolio.”
DAIM analysts forecast that the bottom of the bitcoin and crypto market will come towards the end of this year, warning the bitcoin price could fall as low as $10,000, but remain upbeat over the long-term.
“Max pain in Bitcoin generally means max opportunity,” DAIM analysts added. “There will be a time when the negative news runs out.”