Stablecoins held on exchanges are at the lowest level in two years ─ Investors avoid risk | coindesk JAPAN | Coindesk Japan

The number of stablecoins (dollar-pegged cryptoassets) held in addresses tied to centralized cryptocurrency exchanges has fallen to its lowest level since May 2021, prompting investors to This indicates a growing aversion to the risk of

As of May 1, the balance stood at $21.06 billion, according to Glassnode data. Glassnode is an exchange for Binance USD (BUSD), Gemini Dollar (GUSD), HSUD, Dai (DAI), Paxos (USDP), EURS, Sai (SAI), sUSD, Tether (USDT), and USD Coin (USDC). Tracking balances.

That’s more than half of its record high of more than $44 billion in mid-December. The US regulator’s crackdown on BUSD issuance on exchange Paxos in February and the subsequent volatility of USDC in March added momentum to the decline.

Dollar-pegged crypto assets held in exchange wallets have plummeted to their lowest level since May 2021. (glass node)

“The de-risking of stablecoins reflects Paxos’ de-risking of stablecoins following the regulator’s decision to suspend the issuance of BUSD and the recent depegment of USDC. ,” said Dick Lo, founder and CEO of quant-driven trading firm TDX Strategies.

Paxos stopped issuing the stablecoin BUSD in February following a regulatory order. The world’s second-largest stablecoin, USDC, saw its price fluctuate in March after it was revealed that its issuer, Circle, was depositing money in a then-crisis Silicon Valley bank. .

As exchange balances dwindle, Tether (USDT), the world’s largest stablecoin by market cap, dominates, while BUSD and USDC are trailing.

Insufficient inflow of new funds

Over the past three years, investors have turned to stablecoins to fund their crypto purchases, as they avoid the price volatility of other tokens.

Stablecoin balances declining in tandem with Bitcoin (BTC) price rise, stablecoin-to-BTC fund deployment is the main factor behind the 70% rise in crypto assets this year, with new funds entering the market. This suggests that it is not inflowing.

Investors moved into stablecoins last year as the U.S. dollar and dollar-begged coins became more attractive as the U.S. Federal Reserve (Fed) aggressively raised interest rates to curb inflation. But the incentive to hold the dollar has waned since the end of last year, when monetary easing began to be expected to resume.

In its daily market report, SignalPlus, a tech company focused on cryptocurrency options, said, “Stablecoin balances on CeFi (centralized) exchanges continue to grow as new capital is added to the ecosystem. It’s almost non-existent, so it continues to decline.”

“Additionally, DeFi, NFT and GameFi user activity has dropped significantly despite spot price recovery, reinforcing a cautious view on crypto asset prices in the near future,” SignalPlus added.

｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
| Image: Glassnode
｜Original: Number of Stablecoins Held on Exchanges Slips to 2-Year Low