-
The
supply
of
leading
stablecoins
USDT
and
USDC
grew
by
$10
billion
in
the
past
30
days,
twice
the
inflows
to
bitcoin
ETFs
during
the
same
time,
10x
Research
noted. -
Stablecoins
are
tokens
pegged
predominantly
to
the
U.S.
dollar,
and
are
widely
used
as
a
bridge
between
traditional
currencies
to
digital
assets
and
liquidity
for
trading. -
Stablecoins
might
be
a
better
signal
for
crypto
demand
than
bitcoin
ETF
inflows,
10x
Research
noted.
Crypto
market
watchers
this
year
have
been
fixated
on
demand
for
spot
bitcoin
[BTC]
exchange-traded
funds
to
gauge
the
direction
for
digital
asset
prices.
Watching
the
stablecoin
supply,
however,
could
be
a
more
useful
indicator
for
crypto
demand,
and
its
rapid
expansion
suggests
prices
will
go
higher,
10x
Research
said
in
a
Monday
report.
“We
suggest
paying
less
attention
to
the
bitcoin
ETF
flows,”
Markus
Thielen,
founder
of
10x
Research,
said
in
the
report.
“Stablecoin
issuers
are
the
new
sheriff
in
town,
driving
this
market
higher.”
Stablecoins
–
digital
assets
with
a
fixed
price,
predominantly
pegged
to
one
U.S.
dollar
–
are
a
key
piece
of
infrastructure
bridging
traditional
(fiat)
currencies
with
the
digital
asset
world
and
providing
liquidity
for
trading.
Changes
in
their
supply
provides
an
important
clue
about
the
health
of
the
crypto
market,
as
market
participants
create
(mint)
stablecoins
by
depositing
fiat
money,
the
10x
report
said.
The
supply
of
Tether’s
USDT
and
Circle’s
USDC
–
the
two
largest
stablecoins
–
expanded
by
nearly
$10
billion
combined
over
the
past
30
days,
10x
Research
pointed
out.
Meanwhile,
the
supply
of
MakerDAO’s
DAI
and
Hong
Kong-based
First
Digital’s
FDUSD,
the
third
and
fourth
largest
stablecoins,
also
expanded
by
5%-10%
in
this
period,
CoinGecko
data
shows.
USDT
alone
grew
by
$2.4
billion
in
a
week,
one
of
the
highest
7-day
readings
during
this
bull
market,
the
report
noted.
“Fiat
money
is
being
moved
into
crypto
at
an
accelerated
pace,”
Thielen
said.
Meanwhile,
U.S.-based
spot
bitcoin
ETFs
attracted
$5
billion
of
net
inflows
over
the
past
30
days,
the
report
added.
“The
minting
from
stablecoins
is
twice
as
large
and
might
be
long-only
exposure,
contrary
to
the
ETFs,”
Thielen
said.
This
is
because
ETF
inflows
might
have
been
skewed
by
savvy
market
participants
harvesting
a
yield
from
elevated
futures
funding
rates
with
a
so-called
“carry
trade.”
Funding
rates
–
payments
to
traders
based
on
the
price
difference
between
futures
contracts
and
spot
markets
–
have
been
near
record-highs,
meaning
that
futures
traders
betting
on
higher
prices
(longs)
pay
to
those
holding
short
positions
benefitting
from
price
declines.
This
offers
an
arbitrage
opportunity
known
as
a
carry
trade,
with
savvy
investors
buying
spot
BTC
or
shares
of
one
of
the
spot-based
ETFs
and
selling
equal
size
of
BTC
futures
to
maintain
a
neutral
position
and
safely
pocketing
the
price
difference
as
a
yield.
Notably,
hedge
funds
held
record
amounts
of
BTC
futures
short
positions
on
the
regulated
Chicago
Mercantile
Exchange,
which
could
be
partly
because
of
the
high
demand
for
the
carry
trade,
10x
noted
in
another
report
last
week.