Stablecoin Supply Has Reached $12 Billion; Why This is Bullish for Bitcoin

The amount of stablecoins circulating throughout the crypto market has been tremendous growth in 2020
Although it took this fragment of the market five years grow to $6 billion in size, it has grown to over $12 billion throughout the past six months alone
This is an extremely positive development for Bitcoin, as many view the stablecoin supply as “dry powder” that can help ignite future rallies
Because billions of dollars are pouring into these tokens each month, it is a strong possibility that this capital will eventually be cycled into Bitcoin

The economic turbulence seen by Bitcoin and virtually all other markets throughout the early part of 2020 has given rise to one specific section of the crypto market – stablecoins.
Data shows that the amount of capital held within these tokens has doubled over the past six months, with investors adding an average of $1 billion per month into a variety of different stablecoins.
This is likely the result of non-US investors looking to add USD exposure to their portfolios, as many view the Dollar as a “safe haven” currency due to its relative strength during periods of global economic turmoil.
This trend may ultimately be extremely positive for Bitcoin and the aggregated crypto market, as these tokens may act as “dry powder” that helps fuel the next bull market.
Stablecoin Trading Activity Flourishes as Bitcoin’s Volatility Dives 
Bitcoin’s diving volatility has also resulted in a sharp decline in the cryptocurrency’s on-chain transaction volume.
In June, this caused the value of transactions conducted using stablecoins to exceed that seen by Bitcoin, marking a historical event.
Crypto data aggregator Unfolded spoke about this in a recent tweet, offering a chart revealing this trend seen last month.
“In June 2020, the amount of value transferred using stablecoins eclipsed the amount transferred using BTC for the first time.”

Image Courtesy of Unfolded. Data via CoinMetrics.
Mounting Supply of Stablecoins Could be Dry Powder for BTC
Unfolded also offered data showing that the current stablecoin supply sits around $12 billion, marking a 2x increase from where it started the year.
“After it took 5 years for stablecoin supply to reach 6 billion, it only took another 4 months for it to grow from 6 billion to 12 billion following the March 12th crypto crash.”

Image Courtesy of Unfolded. Data via CoinMetrics.
Because the barrier between switching stablecoins for other digital assets like Bitcoin is quite low, many investors view these tokens as “dry powder.”
If this is the case, then investors may be apt to convert their stablecoins to BTC once its price starts gaining momentum again.
Although $12 billion remains a drop in the bucket, and certainly not enough to catalyze a parabolic bull run, it is highly likely that this number will continue growing significantly in the months ahead.
Featured image from Shutterstock.
Pricing data via TradingView.

Source: https://bitcoinist.com/stablecoin-supply-has-reached-12-billion-why-this-is-bullish-for-bitcoin/?utm_source=rss&utm_medium=rss&utm_campaign=stablecoin-supply-has-reached-12-billion-why-this-is-bullish-for-bitcoin

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