Investors Find Solace in Stablecoins as their Transfers Hit All Time High
The ongoing turmoil caused by the coronavirus outbreak has left markets across the globe in shambles. Nothing seemed to be immune to the panic, with both the stock market and the crypto market seeing massive sell-offs in the past three weeks.
However, while stock market investors have mostly fled to the safety of the U.S. dollar and other fiat currencies, those invested in crypto seemed more reluctant to leave the world of digital assets. This isn’t a conclusion made on anecdotal evidence—a recently published report back this hypothesis with cold, hard data.
Cryptocurrency analytics company CoinMetrics published its monthly State of the Network report, where it analyzed the current state of the market and went deep into some of the events that shaped the past month.
The report presented incredibly interesting data regarding stablecoins, a segment of the crypto market that tends to be overlooked during times of high volatility.
CoinMetrics tracked the supply of all stablecoins from Feb. 19, the time when the impact of the coronavirus pandemic became visible on global markets, and found that they have been incredibly resilient in the wake of the biggest market downturn since 1987.
CoinMetrics found that the growth the stablecoin supply has seen since the beginning of February has gone parabolic after Bitcoin experienced its massive drop on Mar. 12.
Graph comparing Bitcoin’s price with the supply of stablecoins since Feb. 2. (Source: CoinMetrics)
The stablecoin category has seen more than just its supply increase in the past month. CoinMetrics also found that the market cap of stablecoins as a percentage of Bitcoin’s market cap has doubled in a matter of days.
This, the report found, was a result of two things—Bitcoin’s massive price drop and the increased issuance of stablecoins.
Graph showing stablecoins’ market cap as a percentage of Bitcoin’s
The day after Bitcoin saw its massive downturn begin this month, stablecoins have reached an all-time-high in terms of transfer value. On Mar. 13, the aggregated transfer of all stablecoins tracked by CoinMetrics reached a new ATH of $444.21 million.
According to the report, CoinMetrics smoothed the total transfer average using a 7-day rolling average for eight stablecoins: Tether issued on Omni (USDT), Ethereum (USDT-ETH), and Tron (USDT-TRX), DAI, PAX, USDC, TUSD, and GUSD.
Graph showing the total transfer value for stablecoins tracked by CoinMetrics
A surge in stablecoin confidence caused massive increases in their market caps. According to CoinMetrics, USDC has been the biggest gainer percentage-wise, seeing its market cap increase by 57% in the past 30 days. Tether (USDT) issued on Ethereum ranked second with a 40% increase in market cap and was followed closely by USDT issued on Tron.
Graph showing the 30-day growth chart for stablecoin market caps
The huge increase in transfer value shows that fresh money has been pouring into the stablecoin sector during times of great market turmoil, the report found. With investors seeking stability and an easier way to get back into major coins such as Bitcoin and Ethereum once the volatility is over, stablecoins seem to be one of the best ways to keep money safe in the sidelines.