In the past two months, the market has faced a wave of profit taking from investors. Proof of this is shown in the signs of the supply of Tether (USDT) on the exchange.
According to Santiment data, the share of USDT on exchanges increased by 20% in the past 3 months.
This market intelligence platform revealed a rate increase from 19.7% on May 9 to 42% on August 10. This is the first time the supply of USDT on exchanges has surpassed the 42% mark since April 2020.
According to Santiment, it is a sign of buying power at the highest level in two years and also shows traders taking profits when the market recovers.
Over the past 3 months, the supply of USDT has decreased as investors swapped the token due to the gloomy bear market. The stablecoin issuer revealed it bought back $14 billion within 2 weeks.
Meanwhile, Tether resumed minting on July 29 and has since added several billion dollars to the market cap. Many in the crypto community see the increase in the stablecoin supply as a bullish signal.
Binance CEO Changpeng Zhao also revealed more than $40 billion of stablecoins are waiting on the sidelines of the crypto market.
However, Blockware analyst Will Clemente has a different view. According to him, there should be fewer stablecoins on the market because supply exceeds demand and no buyers will push the crypto market down.
He believes that if the volume of a stablecoin in circulation decreases, demand will increase.
While there are mixed opinions about what a high stablecoin supply means for the crypto market, Ethereum users will at least not have to worry after the Merge.
The two largest stablecoin issuers have confirmed that they will support Ethereum PoS after the Merge to avoid disruption to the community.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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